Earlier this week, President Donald Trump announced that the United States and India had reached a landmark trade agreement. While the precise language of the deal has not yet been released, the broad contours are unmistakably positive for both countries.
Under the agreement, tariffs on Indian exports to the United States will be reduced dramatically, falling to roughly 18% from levels that reached as high as 50% on certain goods. In exchange, India will eliminate tariffs on American exports entirely. India has also agreed to halt purchases of Russian oil and to commit, over a five-year period, to buying an additional $500 billion in U.S. goods and services. Those purchases will span communications equipment, pharmaceuticals, energy products, defense items, and agricultural goods.
The agricultural component of the deal is especially significant. The U.S. holds a clear comparative advantage in agricultural production, yet American farmers have long been locked out of the Indian market by high tariffs and restrictive regulations. Opening that market represents a meaningful opportunity for rural America and a long-overdue correction to an unbalanced trade relationship.
The president and his senior trade team deserve credit for securing this agreement. This is not a routine commercial transaction. It is a strategic realignment that reflects a fundamental economic and geopolitical reality: India is a rising power, both economically and politically. It dominates South Asia and is poised to play an increasingly central role in global affairs. It is firmly in the interest of the U.S. to anchor its long-term strategy in the Indo-Pacific region around stronger ties with New Delhi.
The deal also advances a critical U.S. objective: reducing dependence on China. By expanding access to an Indian economy growing at roughly 7% annually, with a middle class of more than 400 million consumers, American businesses gain a powerful alternative to China-centered supply chains. Every dollar of trade and investment redirected toward India is a dollar less strengthening Beijing’s economic leverage.
Unsurprisingly, the agreement represents an economic setback for China, which is both an adversary of the United States and a long-standing rival of India. As India’s economy grows and integrates more deeply with the U.S., global dependence on China declines. That shift strengthens U.S. economic security and reshapes the balance of power in Asia.
The reaction within India underscores the deal’s importance. Indian equity markets surged on the announcement, reflecting confidence that the country is being recognized as a trusted economic partner. That confidence matters. Economic strength underpins geopolitical influence, and a stronger India is better positioned to resist Chinese pressure. This is no abstract concern. India and China share a heavily militarized border and have clashed repeatedly over the past half-century. The Indian navy will also gradually exert increased control over foreign military forces operating in the Indian Ocean.
For decades, U.S. trade policy treated India as a difficult and frustrating partner. High tariffs, regulatory barriers, and protectionist instincts deterred American exporters and investors. But the global environment has changed. China’s economic coercion, intellectual property theft, and open hostility to U.S. interests have forced Washington to identify reliable alternatives. India, with its scale, growth trajectory, and converging strategic interests, stands out.
The agreement also advances supply chain diversification, an urgent lesson from the COVID-19 pandemic and rising tensions with Beijing. Concentrating manufacturing in China proved efficient but dangerously brittle. Resilience matters as much as cost. India cannot replace China overnight, but even incremental shifts reduce Beijing’s leverage and strengthen American economic security. Finally, the deal reinforces U.S. energy dominance. India is among the world’s fastest-growing energy consumers. Expanding exports of American liquefied natural gas and petroleum products supports U.S. workers, helps India secure reliable power, and reduces reliance on unstable or hostile suppliers. That is a win for both countries and for global energy stability.
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Critics will point to India’s labor standards, regulatory disputes, or tradition of nonalignment. These concerns are real, but they miss the larger point. Trade agreements are not rewards for perfection. They are tools for shaping behavior and aligning incentives. Greater economic integration expands U.S. influence rather than diminishing it. Turning away from India would only push it closer to China and Russia, undermining American interests across Asia.
This trade agreement is a clear win for the U.S. and for India, economically, strategically, and geopolitically.
James Rogan is a former U.S. foreign service officer who later worked in law and finance for 30 years. He writes a daily note on markets, economics, politics, and social issues.