After months of tension, the United States and India have finalized an initial trade agreement. Evan A Feigenbaum, a former senior US government official, emphasized that while this deal resolves a pressing issue, it does not automatically restore trust. The agreement, described as a “deal,” contrasts with the EU’s formal trade agreement with India, indicating a different level of commitment and potential flexibility.
President Donald Trump highlighted that the trade deal reduces tariffs on Indian exports to 18 percent, down from the previous 50 percent. This reduction is significant, especially considering the previous tariffs’ impact on the overall relationship between the two countries. The deal also involves India committing to cease purchasing Russian oil, as outlined by the White House.
Feigenbaum pointed out that the previous tariff structure was unsustainable and hindered progress in bilateral relations. The adjustment in tariffs was necessary to prevent further deterioration in ties between the US and India. Despite the tariff reduction giving India a competitive edge compared to some other countries, Feigenbaum cautioned against overestimating its impact, citing other crucial factors in trade decisions.
While the trade deal sets ambitious targets, such as India purchasing $500 billion in US goods and services over time, Feigenbaum viewed this figure as more aspirational than immediately achievable. Energy trade remains a sensitive issue, with India gradually reducing its reliance on Russian oil. However, Feigenbaum noted that India’s historical ties with Russia and its strategic autonomy pose challenges to making explicit commitments in this regard.
Feigenbaum highlighted the recent politicization of the US-India relationship, which had been relatively depoliticized since the early 2000s. The shift in the relationship dynamics, particularly concerning oil-related tariffs and third-country choices, could have lasting implications. While both countries have made progress with the trade deal, rebuilding trust, according to Feigenbaum, will be a gradual process.
