FACTBOX-India's bumpy trade relationship with the US over the last year

By Aftab Ahmed and Shivangi Acharya

Feb 2 (Reuters) - U.S. President Donald Trump said on Monday he had agreed on a trade deal with India, and that New Delhi also agreed to stop buying Russian oil and buy more from the U.S. and potentially Venezuela.

Below are some developments in U.S.-Indian trade relations over the past year.

WHY DID INDIA–U.S. TIES DETERIORATE LAST YEAR?

Between April and August of 2025, Trump surprised India by imposing a tariff of 25% initially on goods shipped to the United States. The U.S. followed up with another 25% tariff, citing India's purchase of Russian oil. The tariff moves pushed duties on most Indian goods shipped to the U.S. to 50% and drove relations between the two countries to a historic low.

India called the actions by Trump unfair.

BREAKDOWN IN TRADE DIPLOMACY

By mid‑2025, prospects for a U.S.–India bilateral trade agreement deteriorated, with negotiations stalling amid heightened tensions. By then, Trump had closed larger deals with Japan and the EU, and offered better terms even to Indian archrival Pakistan. Trump's repeated remarks about mediating the India-Pakistan conflict further strained negotiations and contributed to Indian Prime Minister Narendra Modi delaying calls and meetings with Trump.

Modi declined an invitation from Trump to visit Washington after the G7 meeting in Canada in June. Modi said in a speech that he would protect the interests of farmers, hinting that talks failed over disagreements in the politically sensitive agriculture sector.

India pivoted to improving its relationship with China and struck a landmark trade deal with the European Union.

WHAT IMPACT DID TRUMP’S TARIFFS HAVE ON INDIAN EXPORTS?

Despite the tariffs, merchandise exports to the U.S., India's largest export market, have risen. In November, for instance, they rose 21% year-on-year, mostly thanks to increased electronics exports. Consumer goods like textiles, jewellery and auto parts were hit the hardest.

IMPACT OF TARIFFS ON THE RUPEE AND MARKETS

The Indian markets have been edgy since the worsening of India's relationship with the U.S. Indian equity markets and the Indian rupee were the poorest performers among emerging-market peers last year, on the back of record selling by foreign investors. The selling has continued into 2026.