The US and India are determined to soon conclude detailed negotiations, complete the document to be able to officially sign this agreement as early as March.
According to information released by both sides, the US will reduce protectionist tariffs on Indian goods from 50% to 18%, only slightly higher than the tariffs the US has agreed with allies and partners in the European Union. In return, India does not impose tariffs on US goods exported to its market, commits to purchasing US goods worth 500 billion USD in the next 5 years and especially accepts President Donald Trump's condition of stopping imports of Russian oil to switch to purchasing US liquefied gas, coal and oil.
President Donald Trump expressed satisfaction when simultaneously achieving many goals. During his previous presidential term, Donald Trump had a very close personal relationship with Prime Minister Modi. However, recently, Donald Trump was not satisfied with India's delay in trade negotiations with the US and promoting relations with Russia, especially when India became one of Russia's largest and most important oil importers in the context of Moscow being sanctioned by the US and Western allies for the Ukraine conflict.
Previously, Donald Trump imposed a 25% tariff on India and continued to increase it by 25% because New Delhi still imports oil from Russia, which is actually a form of secondary punishment. The new trade agreement not only helps Donald Trump achieve his goals with India, but also demonstrates the effectiveness of tax policy, expanding the US energy and goods market, and causing difficulties for Russia. This result also helps him reduce domestic pressure and create a deterrent effect on other US economic partners.
India has a tradition of good relations with Russia, and the two sides have established a comprehensive and priority strategic partnership. Russia supplies oil to India at preferential prices. However, the trade agreement with the US shows that when forced to choose between Russia and the US, India chose the US. Interest dominates this choice, when reason overwhelms emotion. The interest here is the US market - which the Russian market cannot replace - while US energy can replace Russian energy for India.
Russia is still a very important partner for India, so New Delhi cannot and does not dare to "pivot completely", but can only lean towards the US in each specific issue.
To rebalance, India is likely to promote cooperation and make greater concessions to Russia in other areas, especially in arms procurement, military equipment and military cooperation, defense, and security.
Russia is the third party most affected by the trade agreement between the US and India, losing a very important oil import market and customer, which is difficult to quickly replace. Russia is forced to seek appropriate countermeasures in the new context and adjust policies for both the US and India.
The US-India trade agreement is forecast to have a strong impact on global trade, especially the oil supply market, creating new oil transit flows and changing the oil supply chain network in the world.
