Trump Hails India-US Trade Deal as Historic, Energy and Coal Exports Take Centre Stage

US President Donald Trump has described the newly announced interim trade agreement between India and the United States as a “historic” milestone, saying it will sharply expand American energy exports, particularly coal, while resetting the broader economic relationship between the world’s two largest democracies.

Speaking at a White House event titled Champion of Coal, Trump said recent trade deals with India, Japan and South Korea are transforming the United States into a dominant global energy exporter. He highlighted coal as a key beneficiary, claiming the agreements would drive a major rise in US coal shipments, with India emerging as one of the most important new markets.

The remarks come days after Washington and New Delhi released a formal framework outlining the path forward for the interim trade arrangement, which both sides see as a stepping stone toward a comprehensive bilateral trade agreement.

US President Donald Trump (Photo: PTI) | Business Standard

Tariff Rollback Signals Major Shift in Trade Ties

At the heart of the deal is a significant rollback of US tariffs on Indian exports. Duties that had risen to as high as 50% during recent trade tensions have now been reduced to a standard reciprocal rate of around 18% across a wide range of sectors, including textiles, apparel, leather goods, plastics, chemicals, home décor products and selected machinery.

In parallel, India has agreed to eliminate or reduce tariffs on a broad basket of American industrial, energy and food products. These include dried distillers’ grains, tree nuts, fruits, soybean oil, wine and spirits, while maintaining protections for sensitive agricultural and dairy sectors. Indian officials have said that nearly 90–95% of core farm products have been kept outside the scope of liberalisation to safeguard farmer interests.

This calibrated approach reflects New Delhi’s effort to balance expanded market access with domestic political and economic considerations.

$500 Billion Purchase Commitment and Energy Realignment

A central pillar of the framework is India’s commitment to purchase approximately $500 billion worth of US goods over the next five years. These planned imports will include energy products, aircraft and aircraft parts, precious metals, technology products and coking coal.

Energy is expected to play a defining role in the evolving partnership. Trump has framed the deal as part of a broader strategy to position the United States as a leading global energy supplier, with coal exports receiving renewed emphasis despite the global shift toward cleaner fuels.

India, which remains heavily dependent on imported energy to support its economic growth, is expected to significantly increase purchases from the US as part of this long-term realignment.

Russian Oil Factor and Geopolitical Implications

According to international reports, the trade framework is also closely linked to a geopolitical shift in India’s energy sourcing. As part of the broader understanding, India has agreed to gradually halt direct and indirect purchases of Russian crude oil.

This move follows pressure from Washington after India increased imports of discounted Russian oil following Western sanctions on Moscow over the Ukraine conflict. In response to India’s commitment, the US has lifted punitive tariffs that had been imposed on Indian goods partly over these energy purchases.

Data cited by Reuters shows that India’s imports of Russian oil have already begun to decline, with further reductions expected in the coming months. This shift is likely to increase India’s reliance on US and other alternative energy suppliers, further integrating energy trade into the strategic core of bilateral ties.

Domestic Reactions and Political Pushback in India

While the government has framed the agreement as a major economic and strategic win, the deal has triggered political pushback within India. Trade unions and farmer groups have organised protests and strikes, warning that increased imports of subsidised American agricultural products could hurt small farmers and local producers.

The Modi government has responded by stressing that sensitive sectors have been protected and that the deal will boost exports, attract investment and strengthen India’s role in global supply chains. Officials have also emphasised that the interim pact is carefully structured and does not represent a blanket opening of India’s agricultural markets.

Roadmap to a Comprehensive Trade Agreement

The interim framework is part of the broader US–India Bilateral Trade Agreement process launched in February 2025. Both sides have indicated that negotiations will continue in the coming months, with the aim of concluding a full-scale trade agreement later in 2026.

Future talks are expected to focus on deeper tariff cuts, regulatory cooperation, supply chain resilience, technology trade and long-term market access rules. The agreement also includes provisions to improve standards recognition and reduce non-tariff barriers, particularly in high-value sectors such as technology and manufacturing.

The MGMM Outlook

The interim India–US trade agreement signals a major reset in bilateral economic ties, with energy and coal exports emerging as a central pillar of the renewed partnership. The framework reflects Washington’s push to position itself as a dominant global energy supplier, while India’s growing demand for imported energy makes the US a key long-term partner. Alongside energy, the deal expands cooperation across aircraft, technology, precious metals and industrial goods, supported by India’s commitment to purchase around $500 billion worth of US products over the next five years. This realignment also strengthens strategic interdependence, linking trade more closely with broader geopolitical and supply chain considerations.

At the same time, the rollback of elevated US tariffs on Indian exports marks a significant shift in trade dynamics, improving market access for key Indian sectors such as textiles, chemicals, leather and home décor. India’s calibrated tariff reductions on selected American goods aim to balance expanded trade with protection for sensitive farm and dairy sectors, reflecting domestic political and economic priorities. The gradual move away from Russian oil further embeds energy trade into the strategic core of the relationship, while ongoing negotiations toward a full bilateral trade agreement are expected to deepen cooperation on technology, manufacturing, regulatory alignment and long-term market access.

(Sources: Business Standard, Times of India, Economic Times)