Nearly five months after the United States imposed steep tariffs on Indian exports, uncertainty continues to hang over the future of an India–US trade agreement. What initially appeared to be a difficult but ongoing negotiation has, in recent days, turned into a complex mix of sharp political statements, diplomatic denials, and cautious reassurance from senior officials on both sides. At the centre of the latest controversy is a claim by a senior aide to former US President Donald Trump that a trade deal collapsed because Prime Minister Narendra Modi “didn’t call” Trump—an assertion that India has firmly rejected. Adding another layer to the evolving picture is a fresh conversation between External Affairs Minister S. Jaishankar and US Secretary of State Marco Rubio, signalling that dialogue has not broken down entirely.

The tariffs in question have had a significant impact on India’s exports to the United States. In August 2025, Washington doubled tariffs on Indian goods from 25% to 50%, with half of the increase described by Trump as a “penalty” for India’s continued purchase of Russian oil. The move was framed by the US administration as part of its broader strategy to pressure Moscow over the war in Ukraine by targeting countries that maintain strong energy ties with Russia. For India, the tariffs represented a serious economic blow and a test of its ability to balance strategic autonomy with growing geopolitical pressures.

Trade negotiations between the two countries had begun well before the tariffs took effect. After receiving a greenlight in February, officials from both sides formally started talks in March–April last year. The aim was to reach a mutually beneficial agreement that could address trade imbalances, market access issues, and broader economic cooperation. However, despite months of discussions, no deal has yet materialised, and recent statements from US leaders have only deepened the ambiguity.

Earlier this month, Donald Trump himself hinted that the tariffs on India could rise even further. Speaking to reporters aboard Air Force One, he referred to Prime Minister Modi as “a good guy” but made it clear that goodwill alone would not prevent punitive trade measures. Trump said India wanted to “make me happy” and that Modi knew he was unhappy with New Delhi’s stance, particularly on Russian oil. “We can raise tariffs on them very quickly,” Trump warned, underlining his transactional approach to international trade and diplomacy.

These remarks echoed earlier claims by Trump that Modi had assured him India would end its oil trade with Russia. That assurance, Trump suggested, was central to US expectations and to the decision to apply economic pressure when India did not alter its energy policy. The US administration has repeatedly argued that Russia uses revenue from oil exports—especially to large buyers like India—to finance its military campaign in Ukraine. From Washington’s perspective, higher tariffs on India were a tool to indirectly squeeze Moscow.

The situation grew more alarming for New Delhi when US Senator Lindsey Graham made remarks suggesting an even harsher trade regime could be on the horizon. Graham said Trump had “greenlit” a bipartisan Russia sanctions bill that could impose tariffs of at least 500% on countries that knowingly engage in trade involving Russian-origin uranium and petroleum products. While the bill remains a proposal and has not yet become law, its language explicitly mentions countries such as India, China, and Brazil as potential targets. Graham described the measure as providing “tremendous leverage” over Russia’s trade partners, raising fears in India of an unprecedented escalation in economic pressure.

Amid this backdrop, US Commerce Secretary Howard Lutnick added fuel to the fire with a controversial claim about the collapse of a potential trade deal. In a podcast interview, Lutnick said that negotiations with India were close to completion but ultimately failed because Prime Minister Modi did not personally call Donald Trump. According to Lutnick, he had insisted on such a call as a final step, claiming that the Indian side was “uncomfortable” and therefore the call never happened. He even suggested that India’s deal was meant to be finalised before agreements with countries like Indonesia, Vietnam, and the Philippines.

India swiftly and firmly rejected this version of events. The Ministry of External Affairs said that Lutnick’s characterisation of the discussions was “not accurate” and reiterated that negotiations were still ongoing. MEA spokesperson Randhir Jaiswal emphasised that India remains open to a mutually beneficial trade agreement and that diplomatic engagements cannot be reduced to the optics of a single phone call. Union Commerce Minister Piyush Goyal also weighed in, urging Indians not to place undue trust in foreign statements and to have confidence in their own government’s handling of the situation.

While the rhetoric from Trump’s allies appeared confrontational, a different tone emerged from other quarters in Washington. The new US ambassador to India, Sergio Gor, struck a notably conciliatory note, describing India as an indispensable partner for the United States. “No partner is more essential than India,” Gor said, adding that the friendship between Modi and Trump was “very real.” His remarks suggested that despite political theatrics and public posturing, the strategic importance of India to the US—economically, militarily, and geopolitically—remains unchanged.

This sense of continuity was reinforced by a recent phone call between External Affairs Minister S. Jaishankar and US Secretary of State Marco Rubio. According to officials, the two leaders discussed a wide range of issues, including trade, critical minerals, nuclear energy, defence cooperation, and energy ties. Jaishankar described the conversation as a “good” one and said that both sides agreed to remain in touch on these matters. The call was widely seen as a signal that diplomatic channels remain open and that the relationship is not solely defined by tariff disputes or sharp political comments.

For India, the core issue remains its energy relationship with Russia. New Delhi has consistently defended its oil purchases, arguing that its energy sourcing decisions are driven by market conditions, global supply realities, and the needs of Indian consumers. Indian officials have stressed that energy security is a national priority and that expecting India to abruptly abandon a major supplier is neither realistic nor fair, especially when many Western countries themselves have struggled to fully disengage from Russian energy.

Looking ahead, the future of the India–US trade deal remains uncertain but not entirely bleak. On one hand, the threat of higher tariffs and sanctions-linked legislation poses a serious risk to bilateral trade. On the other, continued high-level engagement, reassurances from key diplomats, and the sheer strategic weight of the India–US partnership suggest that both sides have strong incentives to find common ground. The coming months will likely determine whether negotiations can overcome political friction and yield a deal—or whether trade tensions will become another enduring fault line in an otherwise broad and complex relationship.