How the US India trade agreement affects the trilateral relations between the US, India, and Russia
On the 2nd, US President Trump stated that he had a phone call with Indian Prime Minister Modi and the two sides reached a trade agreement. Trump said that India will stop purchasing Russian oil and the United States will lower tariffs on Indian goods imported to the United States. Modi confirmed on the same day that the United States will lower tariffs on India, but did not make a statement on India's suspension of Russian oil purchases.
Analysts believe that the US and India reached the agreement based on practical interests, but India finds it difficult to completely stop purchasing Russian oil due to multiple considerations. Although this agreement can ease the economic and trade differences between the two countries, it is difficult to fundamentally promote the improvement of US India relations.
Lowering tariffs, both the US and India have their own preferences
On the same day, Trump posted on social media that Modi agreed to India stop purchasing Russian oil, and the United States would reduce the so-called "equivalent tariff" rate imposed on Indian goods from 25% to 18%, effective immediately. India would also lower tariffs and non-tariff barriers against the United States.
Trump also said that Modi agreed to significantly increase the purchase of US oil and may purchase Venezuelan oil. He said that in addition to purchasing over $500 billion worth of American energy, technology, agriculture, coal and other products, Modi also promised to significantly increase the level of "buying American goods".
A White House spokesperson later that day told CNN that in addition to lowering so-called "equivalent tariffs," Trump will also completely cancel the additional 25% tariffs imposed to force India to stop purchasing Russian oil.
The Times of India reported that the agreement "to some extent reflects reciprocity", with the United States reducing tariffs in exchange for more relaxed market access for India, while India adjusts its energy procurement strategy in exchange for more favorable trade terms.
Media and analysts believe that there is a need for both the United States and India to reach an agreement at present. Liu Zongyi, Director of the South Asia Research Center at the Shanghai Institute of International Studies, said that for India, the US tariff policy has brought considerable pressure to its manufacturing industry, and India urgently needs to restore normal production domestically.
From the perspective of the United States, the free trade agreement reached between India and the European Union at the end of January has become an important factor in "forcing" the United States to adjust its stance. Newsweek pointed out that the conclusion of the Indo European Free Trade Agreement not only puts pressure on the United States, but also gives India more initiative in negotiations with the United States.
Stop purchasing Russian oil? The Indian side has not yet made a public statement
Last August, the United States imposed an additional 25% tariff on Indian exports to the United States, citing India's direct or indirect import of Russian oil. Trump's statement on the 2nd that Modi has agreed to India stop purchasing Russian oil has drawn attention from the outside world.
However, the Indian side has not publicly confirmed this claim. After Trump's message, Modi said on social media that the United States agreed to lower the tariff rate on Indian goods imported to the United States to 18%, but did not mention any changes in India's oil import policy.
Analysts believe that as the world's third largest oil consumer and importer, India will find it difficult to completely stop importing oil from Russia.
One is from the perspective of India Russia relations. India and Russia maintain a long-term strategic partnership. Michael Kugelman, a senior fellow at the Atlantic Council, a US think tank, believes that whether from an economic, diplomatic, or strategic perspective, India is unlikely to completely stop purchasing oil from Russia, a "close partner".
Secondly, from the perspective of economic benefits. Robert Yojie, head of energy futures business at Mizuho Securities Research and Consulting in Japan, pointed out that there is a certain price difference between Russian and American crude oil, and the price advantage makes it difficult for India to completely stop importing oil from Russia.
Thirdly, the feasibility of alternative solutions is low. Trump said that India can turn to purchasing oil from Venezuela. Liu Zongyi responded by saying that for India, Venezuela's current infrastructure is old and its oil production capacity is limited, making it difficult to become a substitute for Russian oil in the short term.
Liu Zongyi believes that even if India intends to stop importing Russian oil, Indian companies still need a certain "transition period" to digest existing contracts and readjust their supply chains. Founder of the Indian Impressions Institute, Robin Sachidff, stated that India will continue to seek limited purchases of Russian oil without triggering sanctions in the future.
Repairing relationships? The rift between the United States and India may be difficult to heal
After Trump's return to the White House, US India relations have significantly declined. India has become one of the countries that have suffered the most from the US' 'tariff stick' policy, and has frequently been provoked and verbally belittled by the US. Analysts point out that the agreement reached between the United States and India can to some extent ease the trade tensions between the two sides.
The article in The Hindu newspaper stated that the agreement eased tensions between India and the United States over tariffs and energy policies over the past year. The Times of India reported that the agreement marks the end of "hard friction" in the trade relationship between India and the United States. But some media and analysts also pointed out that whether the agreement can be implemented still needs to be observed.
Consumer News and Business Channel reported that most of the trade agreements reached by the Trump administration with other countries have remained at the framework stage, with unclear details and unclear implementation timelines. The US India agreement also faces similar problems. Indian economist Srinivasan said that whether the agreement can truly improve India US relations depends on whether the two sides can implement cooperation in areas such as technology and supply chain.
Other analysts have pointed out that the agreement lacks strategic depth and may be able to repair the US India trade relationship to some extent, but cannot bridge the deep rifts between the two sides.
Daniel Russell, a distinguished researcher at the Asia Society, a think tank in the United States, pointed out that "the US India agreement is transactional, not transformative for bilateral relations. Sachidff also stated that the Trump administration's actions have fundamentally damaged mutual trust between India and the United States, and that the "once bitten" India US relationship is difficult to fully restore.