Modi-Trump meeting: Tariffs, trade and visas to dominate talks
2025-02-12
Category: economic

When Indian Prime Minister Narendra Modi visits Washington and meets President Donald Trump later this week, there will be some warm hugs and shared laughs. But that will not be all.Trump and Modi have developed a strong personal rapport over the years, marked by high-profile meetings and joint appearances.Since their first meeting in Washington in 2017, their bond has grown through other events, including joint appearances at massive rallies in Houston and Ahmedabad. Their chemistry stems from shared worldviews and politics and a mutual strategic focus on countering China, a concern that has also strengthened the broader US-India partnership.Not surprisingly, Trump has often criticised India, but he has never criticised Modi.And so, during Modi's visit, the two leaders will probably spend time mapping out next steps in the US-India strategic partnership, which is already in a good place.Modi will reportedly meet several members of Trump's cabinet, as well as US business leaders and members of the Indian-American community.He may also meet SpaceX and Tesla chief Elon Musk. Modi, keen to scale up India's burgeoning electric vehicles sector, would be happy if Musk opened a Tesla factory in India.
And yet the Trump-Modi conviviality and heady talk of strategic partnership may mask a sobering reality: during Modi's visit, the relationship's transactional side will come into sharp relief with each leader, especially Trump, armed with an array of demands.Delhi knows Trump well. Many of Modi's current cabinet ministers also served during his previous term, which overlapped with part of the first Trump administration. That familiarity has been on display since Trump's inauguration last month: Delhi has publicly signalled its willingness to lower tariffs, take back undocumented Indian immigrants and buy American oil. It has already lowered some tariffs and taken back 104 undocumented Indians, with the first plane arriving in India last week. These pre-emptive steps are meant to prevent Trump from making specific demands of India and to reduce the likelihood of tensions with the new Trump administration.Still, Trump may ask Modi to make additional tariff reductions, to further chip away at a US goods and services trade deficit with India that has approached $46bn (£37.10bn) in recent years. But an obstacle could become an opportunity: Modi may call on Trump to enter into bilateral talks on an economic partnership accord meant to reduce tariffs on both sides. In recent years, Delhi has shown a growing willingness to pursue trade deals. The Trump administration may prove to be a more willing interlocutor than the Biden administration, which imposed heavy environmental and labour-related conditions on new trade agreements.
Trump may also ask Modi to take back more undocumented Indians. Given that some estimates put the number at more than 700,000 - the third-largest such group in the US - this will be a difficult and delicate issue for Delhi to navigate. Last week, India's Foreign Minister S Jaishankar told parliament that the government was working with the US to ensure Indian citizens were not mistreated while being deported after reports of them being shackled sparked anger.Trump may also call on Modi to buy more American oil. In 2021, India was the top destination for American oil exports, but the Russian invasion of Ukraine brought major changes in global oil markets and prompted Delhi to ramp up imports of cheap oil from close partner Russia. The price point will determine how much oil India is willing to buy from the US.Modi may also come with his own energy ask: invest in Indian nuclear energy. Delhi is amending its nuclear liability law and has announced a new nuclear energy mission, in an attempt to sharpen international interest in the fuel. India aims to meet half its energy requirements through renewable energy by 2030. Asking Trump to invest in nuclear fuel amounts to a potential happy medium: it is cleaner than fossil fuels, but far removed from the solar and wind power that may not strike the Trump administration as an attractive investment.Technology will probably be discussed as well. This was a fast-growing space for bilateral relations in the Biden era, thanks to the 2022 implementation of the Initiative on Critical and Emerging Technologies (iCET), which both sides view as a new cornerstone for strategic partnership. iCET is meant to be directly overseen by the two national security advisers - to avoid getting bogged down in bureaucracy - which means they must each be personally invested in it. Modi will likely seek assurances from Trump and his National Security Adviser Mike Waltz that they remain committed to this. Given Washington's focus on countering China by making India a bigger part of tech global supply chains, they probably will.Also on the tech co-operation front, Modi may make a pitch for Trump to maintain the H-1B visa regime. These visas for highly skilled foreign workers, heavily criticised by some influential Trump supporters, have been awarded to large numbers of Indian tech employees in the US.
Other countries may also come up during Modi's conversations in Washington. Iran could loom especially large. Delhi is partnering with Tehran to develop a port in Chabahar city - part of a broader Indian strategy to strengthen connectivity links with Central Asia, via Iran and Afghanistan. But last week, the US administration released a presidential memorandum outlining Trump's "maximum pressure" campaign on Tehran, which hints at removing sanctions waivers for those conducting commercial activities in Chabahar. Modi may seek clarity on what this means for Delhi.Trump may also gauge Modi's position on a big foreign policy priority: ending the wars in Ukraine and Gaza. Delhi has a strong interest in these wars winding down. Modi's position on the war in Ukraine - calling for an end to the conflict without criticising Putin or Russia - echoes that of Trump. India's special relationship with Russia and close ties with Israel may prompt Trump to see if Modi would want to play a third-party mediator role as well. Modi would probably be comfortable doing so only if the parties are receptive to outside mediation.But despite some potentially delicate discussions this week, both leaders will want to maintain a positive tone. In that regard, the Indo-Pacific Quad will be just what the doctor ordered. Trump strongly backs this group which consists of the US, India, Japan and Australia and focuses on countering Beijing.In his first term, Trump elevated the Quad's annual meetings to the foreign minister level and Biden elevated them further to the leaders' level. India is scheduled to host this year's Quad meeting and Modi may invite Trump to Delhi to attend this. Trump reportedly is not a big fan of international travel but India is a trip he will probably be keen to make - to deepen his personal relationship with Modi and to advance a multifaceted bilateral partnership that extends well beyond the transactionalism that will carry the day in Washington this week.Michael Kugelman is the director of the Wilson Center's South Asia Institute in WashingtonFollow BBC News India on Instagram, YouTube, Twitter and Facebook.