PM Modi to meet Trump with planned tariff cuts to avoid risk of trade-war

Modi's trip to the US on February 12 and 13 comes as Trump plans to announce reciprocal tariffs on many countries, a move aimed at reshaping global trade relationships in favour of United States

Indian Prime Minister Narendra Modi is preparing additional tariff cuts ahead of a meeting this week with US President Donald Trump that could boost American exports to India and avoid a potential trade war, government officials said.

Modi's two-day US visit from Wednesday comes as Trump plans to announce reciprocal tariffs on many countries, including tariffs of 25 per cent on all steel and aluminium imports by largest trading partner the United States.

Trump has previously called India a "very big abuser" on trade and urged it to buy more American-made security equipment to move towards a fair two-way trading relationship.

 

India is considering tariff cuts in at least a dozen sectors, from electronics to medical and surgical equipment, and chemicals, to boost US exports in line with New Delhi's domestic production plans, three government officials said.

The officials spoke on condition of anonymity as they were not authorised to speak to the media.

India's trade and foreign ministries, and the prime minister's office, did not respond to requests for comment emailed outside official work days.

Trade ties between the two nations have grown steadily over the last decade, with Washington increasingly viewing New Delhi as a counterbalance to China's growing regional influence.

In a statement on Monday, Modi said, "This visit will be an opportunity to build upon the successes of our collaboration in his (Trump's) first term."

He added that technology, trade, defence, energy, and supply chain resilience were areas in which the partnership could be elevated and deepened.

The officials said concessions were being considered on items that India primarily sources from the United States or has more potential appetite to buy, such as dish antennas and wood pulp.

Two-way trade exceeded $118 billion in fiscal 2023-2024, with India posting a surplus of $32 billion.

Mini-trade deal

Modi is expected to discuss tariffs with Trump and India is open to discussing a possible mini trade deal, two government officials said.

His early visit aims to avoid a "trade war-like situation that is happening between the United States and China," said a third official, who also sought anonymity.

But the meeting has been overshadowed by the recent deportation of Indians from the United States.

Trump has already slapped sweeping tariffs of 10 per cent on imports from China, spurring Beijing to respond with duties on American energy.

The discussions on tariff concessions come after India's budget cut average import tariff rates to 11 per cent from 13 per cent on several items, besides reducing taxes on high-end bikes and luxury cars.

India is also reviewing surcharges on more than 30 items, including luxury cars and solar cells.

Metals stocks led losses in Indian shares after news of Trump's tariff plans on steel and aluminium. India's benchmark indexes fell 0.8 per cent, with the metals index dropping 3 per cent.

Nearly a fifth of India's exports of engineering goods - comprising steel and aluminum and worth about $25 billion - are at risk if Trump adopts the proposed 25 per cent tariff, an official of an industry body said.

"We are in a wait-and-watch mode and hope the issue can be amicably resolved during Prime Minister Narendra Modi's visit," the official said, speaking on condition of anonymity as the matter is a sensitive one.

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