U.S.-India Trade Relationship: Evolution from Advancement to Contention under Obama and Trump Administrations
US-India Trade Relations: From Cooperation to Tariffs and Back Again
The relationship between the United States and India, once characterized by growing cooperation and economic growth, underwent a significant shift during the Trump presidency.
During the Obama era, the US and India deepened strategic and economic ties, laying groundwork for cooperation centered on India's rising role in the Indo-Pacific. There was increased defense cooperation, technology partnerships, and joint frameworks like the Quadrilateral Security Dialogue (Quad), promoting a free and open Indo-Pacific region, which aligned economic and security interests against China's regional assertiveness[1].
Under President Trump, the relationship became strained economically. Despite ongoing strategic cooperation, Trump imposed steep tariffs on Indian exports, notably raising steel and aluminum tariffs to 50%, citing national security grounds even after WTO panels ruled against this justification[2][4]. The Trump administration used tariffs as leverage in trade negotiations, seeking to pressure India on issues such as the purchase of Russian oil and its trade barriers[2][5]. This move was viewed negatively in India, as it contradicted prior WTO agreements and was seen as undermining trust. The Trump approach also contrasted with India's independent foreign policy, especially regarding Russia, and was complicated by other US engagements with Pakistan, which India perceived as adverse to its security interests[5].
The Biden administration has sought to deepen and stabilize the partnership. Bilateral trade reached $191 billion in 2022, with the US as India's largest trading partner. The Biden era has emphasized defense and security cooperation, including military modernization support and expanded Quad collaboration into technology, health, and climate domains. Initiatives like the 2023 US-India collaboration on Critical and Emerging Technology (iCET) underscore economic and technological integration. High-level visits and dialogues have reinforced the relationship, and Biden's administration has taken a pragmatic stance toward India's neutral position on Russia-related conflicts despite occasional frictions. Efforts include a signed 10-year defense roadmap and plans for joint innovation and supply chain integration, with trade targets set at $500 billion[1][3]. However, some trade disputes and concerns remain, reflecting ongoing complexities[3].
Notably, the US and India launched a joint work stream to focus on issues to increase bilateral trade, contract enforcement, insolvency and bankruptcy law, and cross border trade. India lifted retaliatory tariffs, resulting in a 35 per cent rise in India's steel and aluminum exports to the US. US exports to India supported 181,000 American jobs and Indian foreign direct investment (FDI) in the US amounted to $7.8 billion[1][3].
Over 132,000 Indian students studied in the US, contributing $3.6 billion to the American economy in the 2014-15 academic year. The Trade Policy Forum (TPF) was revitalized under Biden, becoming the central ministerial-level mechanism for resolving trade disputes and identifying opportunities for growth[1].
In August 2025, the United States imposed a 25% tariff on Indian imports, followed by an additional 25%, escalating trade tensions between the two countries. However, trade negotiations between the US and India continue despite the tariffs.
By January 2024, US-India bilateral trade had likely surpassed $200 billion, a record high. The Biden administration's approach to US-India relations has been one of pragmatic engagement, balancing geopolitical alignment with a focus on economic growth and addressing contentious issues.
- The Biden administration's pragmatic approach to US-India relations has been evident in the economic growth achieved, with bilateral trade reaching an all-time high of over $200 billion by January 2024.
- India's economy saw a 35% increase in steel and aluminum exports to the US after lifting retaliatory tariffs, supporting 181,000 American jobs and attracting $7.8 billion in Indian foreign direct investment in the US.
- Notably, education and trade continue to intertwine as over 132,000 Indian students contributed $3.6 billion to the American economy in the 2014-15 academic year.
- Economic disputes, such as the US imposing a 25% tariff on Indian imports in August 2025, have complications that persist despite ongoing negotiations, hinting at the need for a balanced policy that addresses both economic growth and contentious issues.
- In contrast to the remain strained economic relationship during President Trump's term, the general-news and economic-growth sectors have taken a more positive outlook under the Biden administration, with joint initiatives like the iCET program fostering ties and promoting cooperation in critical technology areas.
