Source: Blog – Alliance for American Manufacturing
Pedestrians walk past a broadcast screen of the Bombay Stock Exchange in Mumbai, India on April 3, 2025, airing news of U.S. President Donald Trump unveiling sweeping new trade tariffs. | Getty Images
The $129 billion bilateral trade relationship is big, complex, and has plenty of room for improvement.
There are rumblings the Trump administration is close to a trade agreement with India – the first in a series of deals anticipated after the White House began negotiations with many U.S. trading partners in the wake of the sweeping tariffs it announced in early April. One administration official said they are “very close” while another said they’re moving “as fast as possible.” But then a report Thursday in Politico threw cold water on all of it, saying a deal isn’t likely until the fall.
It’s hardly a surprise that a quick deal may not be realistic, given the complexities regarding the U.S. trading relationship with India. Still, there are a handful of things to keep in mind about this country as the administration hustles to announce completed agreements.
First of all, the bilateral U.S.-India trade in goods is significant – worth more than $129 billion in 2024 – and lopsided. The goods trade deficit with India that year was $45 billion. In fact, the U.S. has run a goods trade deficit with India since 1985, and the annual deficit has been in the tens of billions since 2010.
These persistent deficits are due in part to the high import tariff rates India has long maintained. The U.S. Trade Representative’s 2025 National Trade Estimate Report on Foreign Trade Barriers notes its “average Most-Favored-Nation (MFN) applied tariff rate was 17.0 percent in 2023 … which was the highest of any major world economy, with an average applied tariff rate of 13.5 percent for non-agricultural goods and 39.0 percent for agricultural goods.”
It’s not just tariffs, though. India has long been the focus of complaints about intellectual property theft, and there are dozens of anti-dumping and countervailing duty measures maintained against Indian imports to the United States that the U.S. Department of Commerce has maintained for decades.
The Indian government heavily subsidizes many of its industries, notably in its enormous steel industry, in which it plays a heavy role. The country’s steel industry was developed behind high tariffs on steel imports, government control over prices, and with the benefit of state allocation of resources. As if to underline the state commitment here, there’s even a branch of the government dedicated to this task: The Indian Ministry of Steel.
As such, the growth of Indian steelmaking has been enormous. U.S. Department of Commerce data show steel production there grew from 89.6 million metric tons (MT) in 2015 to 140.5 MT in 2023, and its production has exceeded apparent consumption in each year from 2016 to 2022. India’s steel exports, meanwhile, ranged from 9.2 MT to nearly 20 MT during the 2016-2023 period.
In 2024, it was the second largest steel industry in the world. India and neighboring China – whose steel industry is the world’s largest – account for 52% of the global steelmaking capacity, according to OECD.
Lastly, it must be noted that Indian industry operate in incredibly lax settings regarding labor and environmental standards. Much of the population breathes air that is 10 times more polluted than what is considered safe by the World Health Organization, much of it caused by industrial emissions. A study published in the Lancet linked pollution to more than 2.3 million premature deaths there in 2019, with nearly 1.6 million attributed to air pollution alone and another 500,000 to polluted water.
Workplace fatality estimates, meanwhile, are abhorrently high. Roughly 48,000 people are killed annually in workplace accidents, according to one recent study. “Government data shows that on average, three workers die each day in Indian factories due to a lack of basic safety measures,” reported German broadcaster DW in 2024. “Labor activists and trade unions say that the figure could be higher as many incidents are not reported.”
So what does it mean for a deal?
President Trump likes to move quickly, as White House trade adviser Peter Navarro noted on TV Wednesday, and Commerce Secretary Howard Lutnick said a deal with an unnamed country (but quite possibly India) was “done, done, done, done” and only hung up on the other side’s parliamentary approval. So don’t be surprised if an agreement is announced – and don’t be surprised either if they continue for a few weeks or months. What we’ve listed above are only a part of the complicated set of issues U.S. negotiators must sort through if they’re to reach a fair deal with their Indian counterparts. And that could take some time.
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