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What U.S.-India Trade Talks Are Really About

July 2, 2025
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What U.S.-India Trade Talks Are Really About
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Welcome to Foreign Policy’s South Asia Brief.

The highlights this week: The United States and India try to clinch a major trade deal, a high-level phone call provides a window into the U.S.-Bangladesh relationship, and the number of Afghans deported from Iran and Pakistan surges in the wake of the Israel-Iran conflict.


U.S.-India Trade Talks Are About Much More Than Trade

This week, Indian External Affairs Minister S. Jaishankar arrived in Washington to attend a Quadrilateral Security Dialogue foreign ministers’ meeting. However, the biggest story in U.S.-India relations right now is arguably ongoing trade negotiations. The two sides are trying to finalize the first phase of a deal before July 9, when U.S. President Donald Trump’s 90-day pause on his sweeping global tariffs is scheduled to end.

The trade talks are high stakes for India, which faces the prospect of a 26 percent U.S. tariff at a moment when its economy—while robust and rapidly growing—has performed unevenly. Yet the talks’ significance extends beyond economic considerations: They are also critical for New Delhi’s overall relations with Washington, which have hit unexpected bumps in recent weeks. The outcome of the talks could serve as a bellwether of the partnership’s broader trajectory.

The Trump administration has made several recent moves that have unnerved New Delhi. First, it didn’t throw its full support behind India during the conflict with Pakistan in May, instead calling for both sides to de-escalate. Subsequently, Trump boasted multiple times of the critical U.S. role in mediating a cease-fire—which India denies—even though New Delhi is sensitive to third-party interventions in its crises.

Trump also publicly offered to help mediate India and Pakistan’s long-term dispute over Kashmir, which the former has made clear is not up for negotiation.

Indian Prime Minister Narendra Modi expressed concerns about these matters in a call with Trump last month. An Indian readout, which said the conversation lasted 35 minutes, suggests Modi spoke in strong terms to Trump while the president “listened carefully.” That call came one day after another U.S. move that likely upset New Delhi: The State Department issued a new travel advisory for India, warning visiting Americans to exercise “increased caution” due to “crime and terrorism.”

India’s concerns have been compounded by signals that the United States is looking to court Pakistan. These include Trump’s messaging on the cease-fire and Kashmir, which was received well in Islamabad; his administration’s calls for engagement with Pakistan on issues including cryptocurrency, critical minerals, and counterterrorism; and most significantly, Trump’s decision to host a White House lunch for Pakistan’s army chief last month.

This all comes after U.S.-India relations got off to a seemingly great start in Trump’s second term. Modi was one of the first foreign leaders to visit the White House after the inauguration. In February, the pair released a joint statement pledging multifaceted cooperation on issues including defense and energy security, building on a partnership that has expanded exponentially in recent decades. To further cement ties, India has made politically risky concessions, from pledging tariff reductions to bringing back dozens of Indians living in the United States illegally.

A trade deal before the end of the tariff pause would deliver a big boost to the U.S.-India partnership at this critical moment. It could be a confidence-building measure that helps the relationship course-correct and brings new momentum to its many tracks, from cooperation in countering China to collaboration on defense, energy, technology, and higher education.

However, a failure to clinch a deal by July 9 would add to the current bilateral malaise and amplify doubts harbored by some in India—admittedly not for the first time in recent years—that the United States can truly be as dependable as long-standing Indian friends such as France and Russia.

U.S. officials have said that “everything is on the table” in trade talks with Washington’s trading partners. This suggests that India will face pressure to make tariff concessions in sectors across the board—including those where protections are politically important, such as agriculture, which is a critical source of employment in India.

Still, given a fast-growing trade relationship, both sides have a strong interest in a deal. The fate of negotiations will likely mirror that of the relationship itself: It will face obstacles but ultimately pull through.


What We’re Following

Yunus-Rubio call. On Monday, Muhammad Yunus, the chief advisor of Bangladesh’s interim government, spoke on the phone with U.S. Secretary of State Marco Rubio, marking one of the highest-level U.S.-Bangladesh engagements to date during the second Trump administration.

The call provides a window into how the United States may approach its relationship with Bangladesh—one that has shifted significantly since Trump returned to office. During the final months of the Biden administration, U.S. officials pledged new development aid and technical assistance for reforms to an interim government looking to rebuild democracy in Bangladesh after former Prime Minister Sheikh Hasina fled the country amid mass protests last August.

The Trump administration has drastically cut foreign aid and has little interest in devoting resources to democracy promotion or nation-building in Bangladesh. Instead, readouts of the Yunus-Rubio call from both governments suggest Washington now views its ties with Dhaka through the lenses of trade and great-power competition.

The pair spoke about strengthening economic ties and partnering on enhancing security in the Indo-Pacific—the latter of which, for the United States, means countering China.

Both goals present challenges for Dhaka. Bangladesh faces a 37 percent U.S. tariff if it doesn’t work out a trade deal with Washington. And it has long pursued a nonaligned foreign policy, aiming to balance ties with major powers rather than siding with or against them.

Terrorist attack in Pakistan. Thirteen Pakistani soldiers were killed in a suicide attack claimed by a Tehreek-e-Taliban Pakistan (TTP) faction on Saturday in North Waziristan, a district in Pakistan’s northwestern Khyber Pakhtunkhwa province near the border with Afghanistan.

TTP militants have frequently targeted the province in recent years, especially since the Taliban’s return to power in Afghanistan, which has provided the TTP a stable sanctuary. Local officials said the attackers smashed an explosives-packed vehicle into a military convoy—a common tactic used by terrorists in Pakistan.

Although this particular attack relied on more traditional tactics, Khyber Pakhtunkhwa’s security situation is increasingly being defined by the use of sophisticated weaponry among both terrorists and security forces.

On Sunday, militants reportedly used a quadcopter drone armed with explosives to strike a paramilitary base. Meanwhile, Pakistan’s military periodically turns to drones to target terrorists, though Islamabad tends not to publicly acknowledge their use due to civilian casualties. It is often unclear if security forces or militants are carrying out the strikes. One strike of unknown origin on June 20 reportedly hit an area near a school, killing one child and injuring multiple others.

This combination of terrorist attacks and the state’s response has angered Pakistani communities; in May, residents of North Waziristan staged a sit-in against a suspected drone strike that reportedly killed four children.

Surge in Afghan deportations. The United Nations refugee agency said over the weekend that at least 1.2 million Afghans have been deported from Iran and Pakistan this year. The number surged during the recent Israel-Iran conflict, with more than 36,000 crossing the border into Afghanistan on June 26 alone.

Some Iranian officials have baselessly accused Afghan refugees of spying for Israel. Meanwhile, in Pakistan, Monday was the deadline for 1.3 millions Afghans to leave voluntarily, with Islamabad planning to deport 3 million by year’s end. Both governments insist that they are only forcing undocumented Afghans to leave, but at least in Pakistan, there is evidence that legally registered refugees have been caught up in the dragnet as well.

In both Iran and Pakistan, deportations began picking up in 2023. But both countries started to become increasingly unwelcoming to Afghan refugees more than a decade ago, leading to large numbers of them choosing to migrate to Europe via the Mediterranean.

Today, those being pushed into Afghanistan—some of whom have never set foot in the country—must grapple not with war but with the brutalities of Taliban rule. Taliban officials claim that deportees will receive housing and other support, but this likely offers little reassurance—especially to women and other vulnerable Afghans who are targeted under the Taliban regime.


Under the Radar

Recent months have brought a spate of tiger deaths in India, which is home to three-quarters of the world’s wild tiger population. Last week, officials in Karnataka state said five tigers—a mother and four cubs—were found dead in a protected forest, possibly from eating a cow carcass laced with poison. Three tigers also died in the state of Assam between March and May, one of which was killed by an angry mob.

Tigers have been considered endangered since 1986. Conservationists have been heartened by India’s rising wild tiger population, which has doubled to more than 3,600 over the past decade. But according to Indian government figures, tiger deaths have risen nearly every year since 2019, with 628 deaths in total from 2019 to 2023. The reasons include natural and unnatural causes, such as poaching.

Tiger conservation has made for a complex challenge for Indian policymakers, who must grapple with the dangers of growing tiger populations coexisting with human communities. From 2019 to 2023, 349 people in India were killed in tiger attacks.


FP’s Most Read This Week

  • Iran Is on Course for a Bomb After U.S. Strikes Fail to Destroy Facilities by Jeffrey Lewis
  • The End of Modernity by Christopher Clark
  • How to Sell a Clash of Civilizations by Nick Danforth

Regional Voices

A Kathmandu Post editorial laments the worsening mental health issues faced by pregnant and postnatal women in Nepal: “The onus of acknowledging the severity of prenatal and postpartum depression and developing related infrastructure to support women falls on the state. A woman’s right to a safe pregnancy and a smooth postpartum experience is non-negotiable.”

In Prothom Alo, Mahmudur Rahman Manna, the head of Bangladesh’s new Nagorik Oikya party, offers a positive appraisal of the country’s future. “I believe that we will be able to overcome the obstacles and differences of opinion that lie ahead,” he writes. “We will be able to take the necessary steps and make the necessary decisions to reach the foothills of democracy.”

Analyst Pratap Bhanu Mehta, writing in the Indian Express, argues that India’s political imagination remains trapped in the past. “This is truly ironic for a country whose population is so young,” he writes. “It is doubly galling that in an era of economic, technological and moral change on such a planetary scale, we still want to remain stuck in the Seventies.”

The post What U.S.-India Trade Talks Are Really About appeared first on Foreign Policy.

Tags: Donald TrumpIndiaSouth AsiaTrade Policy & AgreementsUnited States
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