The Prime Minister of India, in a celebratory tone, hailed the trade deal between India and the United States as a triumph. Phrases like “historic” and “mutually beneficial” were embedded in diplomatic communiques. However, the recent bilateral trade understanding between India and the United States, lauded in official briefings as a ‘strategic deepening,’ has turned out to be an embarrassment. From the outset, it has been a negotiation over hierarchy.
The metaphor of jiu-jitsu, invoked in Parliament by Rahul Gandhi, the Leader of the Opposition, is apt not because it flatters either side with agility but because it acknowledges imbalance. Jiu-jitsu is premised on redirecting force rather than matching it. In the months leading up to the agreement, tariffs rose and fell abruptly; oil purchases were scrutinised; visa pathways tightened; legal authorities were stretched and then challenged. Each move suggested that economics was only the visible surface of a larger contest over autonomy and alignment.
Until recently, India occupied a rare position in its trade relationship with the United States: it ran a surplus. Bilateral trade had climbed to roughly $186 billion in 2024–25; Indian exports outpaced imports, yielding a surplus of around $41 billion. For a country that runs deficits with most major partners, this asymmetry was not trivial. It conferred a practical advantage.
The new framework, however, contemplates India purchasing up to $500 billion in American goods over five years. If realised, such a commitment would reconfigure the balance. A surplus is not a virtue in itself, but its dilution demands explanation. What strategic gains could justify such a structural reversal?
Trade expansion is not the issue. But the question is whether expansion has been paired with reciprocity. The path to this understanding was not smooth. In April 2025, Washington announced reciprocal tariffs of 26 per cent on Indian goods; by July, a 25 per cent tariff was declared for Indian exports entering American markets from August onward.
The escalation followed an earlier punitive tariff linked to India’s purchase of Russian crude oil, which raised the total burden to 50 per cent. Tariffs, in this sequence, ceased to be instruments of trade correction and became signals of displeasure and conditionality.
Energy procurement lay at the centre of this ‘understanding.’ Public statements from Washington pressed India to curtail its purchases of Russian crude, suggesting that tariff relief might hinge on compliance. The message was unmistakable: energy policy, though formally sovereign, was not immune from external calibration.
American officials floated alternative sources, including Venezuela, though India’s imports from that country remained negligible by comparison. Eventually, following an interim framework agreement, Washington reduced the reciprocal tariff to 18 per cent and withdrew the additional punitive measure on Russian oil. Escalation gave way to recalibration. However, the precedent lingered. When trade tools are yoked to geopolitical preferences, partnership shades into tutelage.
It would be naïve to pretend that great powers do not link commerce and strategy. They always have. The United States, the European Union, and China all deploy economic leverage to shape political outcomes. The issue is not the existence of pressure but the terms on which it is absorbed.
Did India extract concessions commensurate with the flexibility it displayed? Or did it accept a new architecture in which tariffs can be raised not merely for dumping or subsidy disputes but for foreign-policy divergence? The durability of any trade understanding depends less on headline numbers than on the predictability of its enforcement.
Predictability, in this case, has been unsettled by law itself. The American administration invoked Section 122 of the Trade Act of 1974—a rarely used provision that permits temporary tariff action—to impose a 10 per cent tariff and threaten to raise it to 15 per cent absent congressional approval.
Subsequently, U.S. courts invalidated aspects of the broader executive tariff regime. Judicial scrutiny introduced a new variable: legal fragility. If tariffs imposed under executive authority can be reversed by the judiciary, then negotiated equilibria rest on shifting ground.
For India, this legal volatility presents both risks and opportunities. Risk, because concessions granted in anticipation of stable tariff relief may prove asymmetrical; opportunity, because a weakened executive mandate creates space for recalibration.
Layered onto this atmosphere of scrutiny is a delicate undercurrent involving corporate entanglements. In recent years, the Adani Group, known to be close to the Prime Minister of India, has faced allegations and regulatory attention in the United States, including inquiries by the U.S. Securities and Exchange Commission into disclosures and market practices.
The existence of such scrutiny has fueled speculation in political circles that broader economic negotiations might, if indirectly, temper regulatory aggression. To date, there is no public evidence that the trade understanding contains provisions shielding any particular firm from investigation, nor would such protections be legal under the American system.
However, the perception that corporate interests hover at the heart of statecraft complicates the optics of concession. In high-stakes diplomacy, even unproven linkages can shape public trust, particularly when trade policy intersects with questions of regulatory sovereignty and capital flows.
Beyond goods, the asymmetry extends into mobility. India’s comparative advantage in services, particularly in technology and skilled labour, has long relied on access to American markets through mechanisms such as the H-1B visa. Recent tightening of H-1B norms complicates that channel. Skilled Indian professionals account for a substantial share of program beneficiaries, and remittances from the United States constitute a significant component of India’s external receipts.
However, while goods liberalisation advances, there has been no visible parallel easing of mobility pathways. Markets for products expand; markets for people constrict. The imbalance may not be intentional—American visa policy is shaped by domestic political economy as much as foreign negotiation—but its effect is structural. A trade understanding that privileges merchandise over movement risks codifies inequality between sectors.
Nowhere are the distributive consequences more visible than in agriculture. According to American fact sheets, India has agreed to reduce or eliminate tariffs on a range of U.S. agricultural and industrial products, including DDG, red sorghum, tree nuts, soybean oil, wine, and spirits, while expanding purchases of energy and technology goods.
For American producers, India represents a vast consumer base. For Indian farmers, the opening raises harder questions. U.S. agriculture is heavily mechanised and supported by federal subsidies; Indian agriculture remains dominated by small and marginal holdings already strained by climate volatility and rising input costs.
An influx of subsidised imports could exert downward pressure on domestic prices. Trade policy is not neutral. It redistributes security. A macroeconomic gain—a larger bilateral volume—may conceal microeconomic distress in rural India.
The textile sector offers an intricate illustration of ripple effects. Nearly 28 per cent of India’s textile exports are destined for the United States, amounting to roughly $10 to $11 billion annually, about half of it in ready-made garments. Tariff uncertainty alone has been destabilising.
Compounding this is the U.S.–Bangladesh arrangement granting zero-tariff access to Bangladeshi apparel contingent on the use of American-grown cotton. India exports billions of dollars’ worth of raw cotton and yarn to Bangladesh. If Bangladeshi manufacturers pivot toward American cotton to secure preferential access, Indian spinning mills and cotton farmers could face a severe shock. Trade agreements are seldom bilateral in effect; they reverberate through supply chains, reshaping comparative advantage in unexpected ways.
Proponents of the new understanding argue that the strategic context demands accommodation. The United States and India share concerns about regional stability, technological resilience, and supply-chain diversification. Closer economic integration, they say, could anchor a broader alignment.
But their arguments fall flat. Strategic convergence should not require structural dependency. A partnership between equals rests on institutional reciprocity, not episodic relief from punitive measures.
The deeper tension is constitutional as much as commercial. The government of India must work to reduce inequality and secure economic justice. International trade engagements cannot be detached from that mandate. When rural incomes wobble, when manufacturing sectors confront abrupt exposure, when skilled mobility narrows without compensating access, the costs are not abstract.
They accumulate in villages and industrial clusters far from diplomatic summits. Sovereignty is not a rhetorical flourish; it is the capacity to align external commitments with internal obligations.
Much will depend on implementation, on whether safeguards for vulnerable sectors are meaningfully designed, and on whether mobility concerns are addressed in parallel. But the sequence that produced it—escalation, linkage, recalibration, legal contestation, and the ambient shadow of corporate scrutiny—should temper celebration.
Trade is not merely about volumes; it is about leverage, about who sets conditions and who absorbs them. If instruments of commerce become tools of compulsion, sovereignty becomes negotiable. And when sovereignty becomes negotiable, economic justice—quiet, procedural, easily overshadowed—becomes the first casualty.
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