U.S.-India Relations Cool as Trade Disputes Rise, Despite New Defense Pact

Washington, D.C. – A significant chill has descended upon U.S.-India relations, marked by escalating trade disputes and a perceived shift in the strategic partnership between the two nations, even as they reaffirmed a decade-long defense agreement yesterday.

The deterioration comes as the U.S. appears to be mending ties with China following a meeting between President Donald Trump and President Xi Jinping in South Korea last Thursday, where a trade truce was reached. Washington agreed to cut tariffs on goods related to fentanyl to 10% from 20%, reducing the overall rate on Chinese goods to around 47%, a rate now lower than the 50% tariffs—plus 25% secondary duties—imposed on India, including those related to its purchase of Russian oil. India has labeled the U.S. tariffs “unfair, unjustified and unreasonable.” Experts warn this divergence could reshape the geopolitical landscape in the Indo-Pacific region.

Several factors are contributing to the strain, including a $100,000 fee for H1B visas, and President Trump’s repeated claims of having brokered a ceasefire between India and Pakistan. “President Trump evidently does not value India as a partner in balancing China as much as the previous presidents,” said Raymond Vickery Jr., senior associate and chair on India and emerging Asia Economics at the Center for Strategic and International Studies. Atman Trivedi, a partner and lead of the South Asia Practice at DGA-Albright Stonebridge Group, noted that trust between the two countries “could take years to rebuild,” adding that “At the leader-level, the chemistry is missing for now, and the impact of this disconnect on the U.S.-India relationship probably cannot be overstated.”

Despite the trade tensions, the U.S. and India on Friday signed a 10-year “Framework for the US-India Major Defence Partnership,” with officials emphasizing continued cooperation. U.S. Secretary of Defense Pete Hegseth stated on X that the two countries were improving “coordination, info sharing, and tech cooperation,” while his Indian counterpart Rajnath Singh said the partnership was “critical for ensuring a free, open and rules-based Indo-Pacific region.” However, analysts suggest that if the U.S. maintains its transactional approach, India may increasingly align with Russia, the Global South, and even China, potentially undermining the strategic interests of both nations. Learn more about U.S. relations with India on the State Department website.

Officials indicated that further discussions are planned to address the trade imbalances and restore a more collaborative relationship, but no immediate timeline has been established.