5 min readAug 4, 2026 05:40 PM IST First published on: Aug 4, 2026 at 05:40 PM ISTThere is no doubt that an India-US trade agreement is important for India. The US is India’s second-largest trading partner, with bilateral trade of about $150 billion in 2025. It is also one of the few major economies with which India enjoys a trade surplus. Geopolitically, the US remains a vital strategic partner through the QUAD and as a stabilising influence in the Indo-Pacific, particularly at a time when India-China relations remain strained. Finally, India is an important democratic partner for the US-led Western world.Yet the negotiations increasingly appear to be an exercise in futility. At one stage, US President Donald Trump insisted that India acknowledge a decisive US role in ending the Indo-Pak conflict, reportedly because such recognition would bolster his Nobel Peace Prize aspirations. A 50 per cent tariff was briefly imposed before being withdrawn, but not before employment-intensive sectors such as textiles and sports goods suffered heavy losses in the US market during 2025-26. More recently, Trump announced tariffs of 100 per cent on India’s pharmaceutical exports from 2028, rising to 200 per cent the following year unless production shifts to the US. Such a move is unlikely to succeed because affordable Indian generics underpin healthcare for millions of American consumers. If such tariffs are announced unilaterally, what exactly remains to be negotiated?AdvertisementConsider some of Trump’s other unilateral tariff announcements. For one, under Section 338 of the US Tariff Act of 1930, he announced 50 per cent tariffs on some Canadian imports effective August 2026. While this may impact only about $20 billion of imports, there’s no knowing what he will announce next. In a recent press conference, he felt tariffs were a cost Canada should pay for the smoke from the recent wildfire in Central Canada, which sent the AQI soaring in some central US cities for a few days. This is in addition to the 12.5 per cent tariffs for “unfair trade practices” like use of forced labour and the already existing 25 per cent tariff under Section 232. Then what is the relevance of the United States-Mexico-Canada Agreement that Trump himself re-negotiated?Also Read | India has history, culture and cuisine. Why doesn’t it attract enough foreign tourists?Consider another important US trade partner, Mexico. Currently, about 80 per cent of Mexican imports enter the US duty-free under the USMCA. Recently, lettuce imports from Mexico are said to have caused the spread of a parasite called Cyclospora, which led to a gut infection in many US states. While it hasn’t come to this, there is no telling when Trump links that to an “unfair trade practice” and slaps bans on some Mexican imports! Under the three laws and their sections (301, 232 and 338), all US imports are now covered. As Jamieson Greer recently announced to the legislature, the Trump strategy on tariffs has changed, but the main message is the same: Tariffs will be a revenue-raising device with the long-term objective of encouraging manufacturing to shift to the US. Irrespective of what Congress feels, these three allow Trump to arbitrarily impose duties irrespective of any trade negotiation signed. Canada and the USMCA are a case in point. Only domestic inflation affects Trump’s trade policy, not any agreement.There is not much for India to do but go ahead with the pretence that the negotiation is based on each country’s “comparative advantage”. For Trump, this has no meaning. Recently the US raised the issue that India’s UPI payment system, backed by the government, constitutes an “ unfair advantage” to others (read Apple!) payment systems and is uncompetitive! Who knows when this brings a blanket 25 per cent tariff (like the Pix payment system did for Brazil). The negotiated agreement will mean nothing. Like Canada, the Indian government will have to bring in legislation (like in the case of forced labour) to show “sincerity of purpose”. But there is no knowing when this stops, as other red flags like imports of Russian oil will spring up.AdvertisementSo what should Indian negotiators do? Proceed in good faith but expect little from a long-term point of view. Far better to concentrate on other trade agreements like with the UK, EU and a host of other countries. Trade policy must now focus on diversifying commodity trade away from the US. China has done so successfully. India remains in the saddle as far as trade in services is concerned. Fortunately, this is not yet affected by Trump’s “trade policy”.The writer is visiting professor, Shiv Nadar University