Trump's poll setback fuels hope for U.S.-India trade deal
The U.S.-India trade deal may be signed in December after Trump's midterm setback, with talks largely concluded and tariffs in focus.
A deal back in focus
The trade deal between the United States and India, uncertain since February, may get a final push to the finish line after President Donald Trump's setback in the midterm elections. Experts told CNBC that Trump could lean toward closing pending trade deals to present them as policy achievements, and the pact with New Delhi is a prime candidate.
Trump and Indian Prime Minister Narendra Modi are likely to sign the pact when they meet in December, with the G20 leaders meeting seen as the likely stage, as negotiations have largely concluded. Indian media reported that Commerce Minister Piyush Goyal confirmed discussions had largely concluded.
What was agreed in February
In February, Trump announced a deal with India, saying New Delhi had agreed to buy American goods at a much higher level after the U.S. agreed to cut tariffs to 18%. Trump had earlier imposed a 25% tariff on imports from India, plus an additional 25% duty on goods from New Delhi for buying Russian oil.
The pact has awaited final approval since then, and the Supreme Court's decision striking down Trump tariffs gave India room to demand preferential tariffs that give it an edge over competitors. The two nations unveiled the deal's framework in February, which brought down the punitive tariffs on most Indian goods, though they have not signed off on the pact yet.
- Tariff rate in February framework18%
- Base tariff imposed earlier25%
- Extra duty for Russian oil purchases25%
- Household tax burden in 2026$820
- Potential foreign inflows to India$115 billion
Why the timing may have changed
At the start of October, American and Indian officials said negotiations had reached an impasse, but on Oct 20 Trump said the two sides were "pretty close" to a final deal. Mark Linscott, a former assistant U.S. trade representative, told CNBC the talks "are far along and there seems to be a gentlemen's agreement between Trump and Modi" that the deal should be concluded when the two meet at Mar-a-Lago in December.
Ronak D. Desai of Stanford University's Hoover Institution said the election was a verdict on the cost of living, and that tariffs are now a liability the president cannot defend on the numbers. Atman Trivedi of DGA Albright Stonebridge Group said the president may lean more into getting deals done, seeing them as policy achievements he can promote to the American public.
The stakes at home and in the markets
According to Tax Foundation estimates, the duties raised the average U.S. household's tax burden by $820 in 2026 and $1,000 in 2025, and the cost of living was the top concern for voters in the midterms. Democrats, within days of taking control of both houses of Congress, are preparing to challenge the tariff policy.
India has its own sensitivities. Trade Minister Piyush Goyal said India will not compromise the interests of its farmers, after a coalition of more than 100 farm groups warned the deal put farmers for sale. For investors, JPMorgan estimated that if global investors neutralize their underweight positions on India, it could lead to foreign inflows of $115 billion. Adani Ports and Special Economic Zone will acquire Netherlands-based Evos in an all-cash deal at an enterprise value of 2.56 billion euros. India reports October consumer inflation on Nov 12 and the October unemployment rate on Nov 15.
