Stalled India-US Trade Deal Highlights Impact of Personal Diplomacy, Lutnick Says

Advertisment

U.S. Commerce Secretary Howard Lutnick claimed that a potential trade deal between India and the United States fell through because Prime Minister Narendra Modi did not call former President Donald Trump. 

Speaking on a podcast with entrepreneur Chamath Palihapitiya, Lutnick said, “It’s all set up, but I said I gotta have Modi call the President...they were uncomfortable doing it, so Modi didn’t call.” He added that India was “on the wrong side of the see-saw” despite negotiations being nearly finalized.

US Tariffs and Energy Tensions


The remarks come amid heightened trade tensions between the two nations. The US had imposed 50% tariffs on India in August 2025, citing New Delhi’s continued oil imports from Russia. 

Advertisment

Trump recently suggested that tariffs could be raised further if India did not cooperate on the “Russian oil issue,” stating, “India wanted to make me happy. Modi is a very good guy, and he knew I was not happy. We can raise tariffs on them very quickly.”

India’s Response: No Rush, No Pressure


India has kept the position that the energy deals are based on the market conditions and the domestic requirements. Union Minister Piyush Goyal made it clear that India is willing to negotiate but will not take deals under "momentary pressure." "We are talking to the United States, of course, but we don’t do deals in a hurry, and we don’t do deals with deadlines or with a gun on our head,” he had said. This position mirrors India's preference for energy security over foreign influence.

Sanctioning Russia Act of 2025 Raises Stakes


A new US bill, the ‘Sanctioning Russia Act of 2025,’ is proposed to raise tariffs on nations doing business with Russia by as much as 500%. Such a bill intends to apply pressure on the Kremlin through the intensification of its Ukraine offensive while simultaneously affecting Indian oil imports indirectly. 

Advertisment

Commentators believe that the bill reveals the increasing intricacies involved in the Indian-American trade relations, where it is necessary to skillfully manage the interplay of diplomatic collaboration and energy security issues.

Implications for Future India-US Trade


The stalled deal underscores the challenges in aligning strategic, economic, and diplomatic interests between India and the US. Though the two countries continue to engage, the incident shows how personal diplomacy, energy policies, and legislative actions can determine the fate of international trade. 

Future talks will need very careful coordination so that there is no further escalation and no damage done to the bilateral relations. 

Advertisment