Trump-Modi Ties Boost Trade Deal Prospects

Washington DC, 1 July, 2025:

A bilateral trade agreement is expected to be announced soon, according to the White House, which also confirmed that US President Donald Trump and Indian Prime Minister Narendra Modi have a "very good" relationship. At a press briefing, White House Press Secretary Karoline Leavitt stated: "The President has a very good relationship with Prime Minister Modi, and India remains a very strategic ally in the Asia Pacific … Regarding India, you will hear from the President and his trade team shortly. We are very close to a trade agreement.

According to sources, the agreement in question is an interim trade agreement designed to prevent reciprocal tariffs of up to 26% that would otherwise go into effect on July 9. Mutual tariff reductions on a variety of goods are anticipated, and India has committed to importing more US energy and agricultural commodities, such as fruits, nuts, and natural gas, while protecting important industries like wheat and dairy with clearly defined "red lines". A senior official in the trade ministry claims that India is "prioritizing national interest" and has engaged in discussions about selective tariff reductions in exchange for improved market access in other sectors.

This deal's timing is very important. During the April "Liberation Day" announcement, President Trump's administration set a 90 day deadline for tariff relief. Both countries are working hard to finalize an agreement that can be unveiled before the pause expires on July 9. Speaking at the US-India Strategic Partnership Forum in early June, US Commerce Secretary Howard Lutnick affirmed that talks were in their "final stage" and that "you should expect a deal… in the not too distant future."

The possibility of a trade deal comes after Trump and Modi had high profile talks earlier this year. Both leaders launched a framework for deeper defense and energy ties during a February White House visit, and they committed to doubling bilateral trade to US$500 billion by 2030. Even a draft trade agreement, according to analysts, would help ease rising economic tensions, avoid upsetting millions of exporters, and set the stage for a larger, more comprehensive agreement later this year. 

The world economy is keeping a close eye on markets as they respond favorably to reports of an agreement that is getting closer. If the agreement is made public before July 9th, it will be a significant milestone in India-US economic cooperation and fortify the two countries' strategic alliance.