Trump’s Zero-Tariff Claim and the Strain in Indo-US Trade Ties

In a surprising and politically loaded claim, former U.S. President Donald Trump asserted that India has offered the United States a trade deal with zero tariffs, pushing Indian Prime Minister Narendra Modi into a diplomatically delicate position. This claim, made during an event with business leaders in Qatar, not only stirred controversy but added to an already complex bilateral relationship that has been oscillating between strategic cooperation and sharp trade disagreements.

India and the U.S., despite being the world’s largest democracies and strategic partners, have had a historically uneven trade relationship. As of 2024, bilateral trade between the two countries stood at approximately $120 billion, with India enjoying a trade surplus of around $45 billion. Trump, known for his transactional view of international relations, has repeatedly targeted countries with trade surpluses vis-à-vis the U.S., often accusing them of unfair practices. India, labeled by Trump as the “tariff king,” has been a frequent target of such rhetoric, despite the reality that India's average applied tariff rate stands at about 17.6%, according to WTO data, while the U.S. average is closer to 3.4%. However, this disparity reflects the different stages of economic development and the protection India extends to its infant industries rather than overt protectionism.

The latest Trump claim—that India has offered a zero-tariff trade deal to the U.S.—comes amid ongoing negotiations between the two countries, especially after the 90-day pause on new tariffs Trump had announced in April for several major trading partners, including India. This pause followed his imposition of a 26% tariff on several Indian goods, a move that drew criticism from Indian policymakers and business lobbies. While New Delhi has been attempting to stabilize and strengthen its trade relations with the U.S., especially in light of shifting global supply chains and the post-COVID economic reordering, the zero-tariff claim appears to have come from left field.

No official statement from India has validated Trump’s claim. In fact, the Indian side has been characteristically cautious. Any declaration of a zero-tariff deal would not only undermine India’s domestic manufacturing sector under the ‘Make in India’ initiative but would also spark fierce criticism from opposition parties, already skeptical of the government’s handling of foreign policy. Given India's reliance on tariff revenues and its goal of promoting indigenous industries, particularly in electronics, agriculture, and automobiles, a zero-tariff policy toward U.S. imports would be both economically and politically untenable.

The timing of Trump’s claim is also politically sensitive. His previous statement that he facilitated a ceasefire between India and Pakistan was already being denied by New Delhi, which insists that no third-party mediation has been involved. Now, with Trump alleging a zero-tariff offer, Modi’s political adversaries have been provided fresh ammunition to accuse the government of compromising national interests or lacking transparency in its foreign policy engagements.

Trump’s remarks extended beyond trade. His claim of dissuading Apple CEO Tim Cook from expanding manufacturing operations in India is another provocative assertion. Apple has been one of the most significant foreign investors in India’s tech manufacturing space. In the aftermath of COVID-19 and China’s supply chain disruptions, India emerged as an alternative base for companies seeking to diversify. By March 2025, Apple’s manufacturing operations in India had reached an output of $22 billion, a 60% jump over the previous year, and was set to fulfill most of the iPhone demand in the U.S. from Indian factories by the start of next year.

The suggestion that Trump has tried to pull Apple back into the U.S., discouraging its Indian production, undercuts India’s ongoing efforts to project itself as a manufacturing hub. It also questions the long-term reliability of U.S. corporate commitments to India. While companies such as Apple and Tesla have voiced interest in deepening ties with India, the changing political climate in the U.S., particularly if Trump returns to the presidency, could complicate these ambitions.

Furthermore, the larger strategic implications are worth noting. India has been trying to position itself as a reliable democratic counterweight to China in the Indo-Pacific. Trade, technology, and defense cooperation with the U.S. form the backbone of this strategy. However, the unpredictability introduced by Trump's statements risks undermining the trust and stability necessary for such strategic alignment. India's reluctance to immediately refute or confirm Trump’s claims reflects the complex dance it must maintain—balancing economic pragmatism with political sovereignty.

As of now, the proposed Indo-U.S. trade deal remains a work in progress. Earlier negotiations had stalled over issues like market access, digital trade norms, and agricultural subsidies. While some tariffs—on products like bourbon whiskey and Harley-Davidson motorcycles—have been reduced, India continues to seek greater access to U.S. markets for its pharmaceuticals, textiles, and information technology services. On the other hand, Washington has pushed for fewer barriers on agricultural goods, medical devices, and e-commerce regulations.

It is clear that any comprehensive trade deal will require careful calibration of national interests. A zero-tariff agreement, as claimed by Trump, is highly unlikely in the near term without significant concessions from the U.S. side—something Trump himself has rarely shown an inclination to make. Moreover, such a move would demand a fundamental shift in India’s current trade policy framework, which remains cautious, sector-protective, and centered on strategic autonomy.

Trump’s claim, whether a political ploy or a mischaracterization of ongoing talks, highlights the fragility of high-stakes international negotiations conducted in the glare of public rhetoric. As India navigates these turbulent waters, it will have to safeguard its economic interests while also maintaining its image as a credible global partner. The challenge is not just negotiating a deal with the United States, but doing so without compromising on the broader objectives of self-reliant growth, industrial development, and geopolitical balance.