Washington, Feb 4 (IANS) After months of rancor and uncertainty, the United States and India have announced an initial trade deal. The agreement eases a standoff that had become untenable for both sides, but it will not magically restore trust, a former senior US government official has opined.
The assessment comes from Evan A Feigenbaum, Vice President for Studies at the Carnegie Endowment for International Peace, who made the argument in an opinion piece published on the think tank’s blog on Wednesday.
The timing matters. The US-India announcement came just a week after India and the European Union concluded a long-negotiated Free Trade Agreement. Feigenbaum said the contrast is sharp. The EU deal is a formal trade agreement. Washington’s understanding with New Delhi is a trade “deal,” a term that implies flexibility and the risk of reversal.
US President Donald Trump has said the deal cuts tariffs on Indian exports to 18 per cent. That is down from a combined 50 per cent rate. The earlier figure included a 25 per cent base tariff and a 25 per cent penalty linked to India’s purchases of Russian oil. Trump has also said India will buy $500 billion in US goods and services over time.
The White House described the deal as including an explicit Indian promise to stop buying Russian oil.
Feigenbaum said the previous tariff regime was unsustainable as it blocked progress across the relationship and rolling it back was inevitable. Allowing ties to deteriorate further would have caused more damage.
The new tariff rate gives India a relative edge. Most ASEAN countries face tariffs of about 19 per cent. Vietnam’s rate is 20 per cent. Additional penalties apply in cases involving Chinese transshipment. In that context, 18 per cent looks favourable for the Indian exporters.
Still, Feigenbaum cautioned against overreading the advantage. Tariffs are only one factor in trade and investment decisions. Differences of one or two percentage points are unlikely to outweigh Southeast Asia’s stronger supply chains and manufacturing base.
He also questioned the scale of projected trade. US goods exports to India were $41.5 billion in 2024. Services exports were $41.8 billion. Reaching $500 billion would require a dramatic increase. The figure, he said, should be seen as aspirational.
Energy remains sensitive. Feigenbaum noted that India has been gradually reducing imports of Russian crude. But he said New Delhi is unlikely to make such commitments explicit. India’s ties with Russia and its emphasis on strategic autonomy make a public break politically difficult.
Most importantly, he said recent months have re-politicised a relationship that had been largely depoliticised since the 2000s. The earlier oil-linked tariff tied to third-country choices set a precedent that could linger.
Washington and New Delhi are better off than they were months ago, Feigenbaum wrote. Both sides should take the win. But trust, once damaged, is slow to rebuild.
--IANS
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