India’s prime minister will arrive at the White House this afternoon with tariffs an unavoidable top-of-mind agenda item, but other issues in play have the potential to head off some new duties between the world's first- and fifth-largest economies.
Perhaps the most prominent issue that could help India blunt Trump's new tariffs is energy. Narendra Modi oversees an economy that is a key recipient of US oil and gas exports, and it's clear that changes on that front could be on the table depending on how the tariff talks go.
"Trump has made it very clear that he views a lot of these things transactionally," said Shayak Sengupta, who leads the India program at Columbia University's Center on Global Energy Policy.
India also has a longtime personal connection between Trump and Modi working in its favor, Sengupta adds, noting the country "hasn't approached this Trump presidency with as much nervousness as, say for example, the European Union."
Prime Minister Narendra Modi of India and US President Donald Trump in 2020 in New Delhi. (Mohd Zakir/Hindustan Times via Getty Images) ·Hindustan Times via Getty Images
Modi has also already started discussing cutting some tariffs on more symbolic US goods like Harley-Davidson motorcycles ahead of this week's visit.
But whether Trump is willing to overlook the deep trade deficit remains to be seen, with the president also set to lay out his plans for reciprocal tariffs today before Modi arrives at the White House at 4 p.m. ET.
Trump previewed those duties Thursday morning, writing, "TODAY IS THE BIG ONE: RECIPROCAL TARIFFS!!!"
The talks between Trump and Modi will continue through dinner, and a range of additional trade issues will be on the table.
A Jan. 27 call between Modi and Trump also included a conversation about India buying more American-made security equipment as part of "moving toward a fair bilateral trading relationship," according to a White House summary.
Another keen issue between the two countries, experts expect, could be non-tariff trading barriers that the US is able to implement more effectively using regulatory capacity or simply the money to subsidize impacted industries.
Will Trump be able to look past the trade deficit?
The trade deficit between the US and India has been widening quickly and recently topped $45 billion, with India also charging some of the highest tariffs in the world.
Both facts have long rankled Trump and his aides.
"The world has taken advantage of the United States for many years," he said Wednesday. "We're going to be doing reciprocal tariffs, which is whatever they charge, we charge very simply."
But it's unlikely to be quite that simple in India's case. The nation imports energy from the US and relies on various other sources of oil and natural gas to power its economy, with President Trump also keenly interested in increasing US energy exports.
India currently imports significant energy from Russia at a cheaper cost than US energy, but the increased costs of some sort of uptick in US energy imports could — from India's perspective — be more than offset by avoiding new Trump tariffs.
In just a few weeks since the inauguration, the White House added a last-minute carve-out for lower duties on Canadian energy in the back-and-forth with that country.
And promises from Japan's prime minister, Shigeru Ishiba, to import more liquefied natural gas helped Trump claim victory there during a recent White House visit.
Other issues
Modi is also likely to make a case Thursday afternoon that non-tariff trade barriers the US employs also need to be considered.
"It is hard to employ all of the non-tariff protectionism that the United States employs in terms of money and resources and just administrative capabilities and the rest," Scott Lincicome of the Cato Institute said in a recent interview.
It's long been a keen issue for countries like India that say focusing simply on tariffs rates alone misses that overall picture.
But, Lincicome noted, that could come face to face with Trump, who "doesn't care about any of that and just simply wants to go after tariffs."
A sculpture in India's Odisha state on Nov. 6, 2024, after Donald Trump's election victory. Indian Prime Minister Narendra Modi also congratulated Trump for a "historic election victory." (AFP via Getty Images) ·- via Getty Images
In the end, many expect a trade agreement is possible, perhaps the question being whether it will be one that will significantly change the trade landscape between the two nations.
Professor Sengupta notes that previous deals — including some with Trump — have been struck with fanfare and promises of increased purchases of various goods, but then down the line "I suspect you're not going to see as much of a movement in terms of the deficit, the trade surplus, or whatever metric that you want to look at."
Correction: A previous version of this story had an incorrect tally for the trade deficit between the US and India. It is over $45 billion.
Ben Werschkul is Washington correspondent for Yahoo Finance.
