Yours truly is not an expert on the subcontinent, so perhaps I am missing something critical. However, I am mystified over what looks like Modi knuckling under to Trump over his tariff threats. Modi’s concessions look even more unjustified given that the odds are good that the Supreme Court will nix Trump’s imposition of tariffs under the International Emergency Economic Powers Act of 1977. The Administration already lost to a challenge filed in the Court of International Trade that was affirmed by the appellate bench. The short version of the argument is that the statute requires that there be a bona fide emergency, and Trump’s desire to beat up other countries does not amount to one.
The Administration does have fallback routes for imposing tariffs, but they are much more limited in scope, level, and duration.1 India’s foreign minister Jaishankar is highly accomplished. So why didn’t India emulate Russia, act all negotiation-friendly but draw out the timetable by insisting that fine points be carefully memorialized, something the Trump Administration does not do at all well?
As we’ll unpack, even though Modi looks weak in giving in to Trump on Venezuela oil purchases, the practical impact is likely to be limited. But other elements, particularly allowing US Big Ag in to compete with India’s large population of farmers, are shockers. Perhaps as he is wont to do, Trump has misrepresented what Modi agreed to, forcing the Prime Minister into the awkward position of having to contradict Trump.
Some overviews, first from Economic Times of India, which highlights that no one is exactly sure what the deal is:
US President Donald Trump’s announcement of a trade deal with India has put agriculture at the center of attention as there is yet little clarity on what exactly has been agreed. In a Truth Social post, Trump said the deal would slash US tariffs on Indian goods to 18% from 50% in return for India halting Russian oil purchases, lowering trade barriers and committing to “BUY AMERICAN at a much higher level.” He added that India would buy more than $500 billion worth of U.S. energy, including coal, as well as technology — and agriculture products too.
Trump did not specify which agricultural products India would buy, in what quantities, or under what timelines. There was no indication of when the lower tariffs would kick in, no deadline for ending Russian oil purchases, and no clarity on the trade barriers that would be reduced. The White House had not issued a presidential proclamation or published a Federal Register notice yet, both legally required to make tariff changes effective. Agriculture has been flagged, but exact details have yet to come out….
The day after Trump’s announcement, US Secretary of Agriculture Brooke Rollins reinforced the White House’s narrative. In a post on X, Rollins said the new India–U.S. deal would export more American farm products to India’s “massive market,” lift prices and pump cash into rural America. She pointed to America’s $1.3 billion agricultural trade deficit with India in 2024 and said the deal would go a long way toward reducing it, calling it an “America First victory” for American farmers.
On the Indian side, however, the emphasis was notably different. Commerce Minister Piyush Goyal, in his own post on X, hailed the agreement as one that would unlock unprecedented opportunities for farmers, MSMEs, entrepreneurs and skilled workers, framing it around “Make in India for the world, Design in India for the world, and Innovate in India for the world.” He stressed that the deal would help India gain access to US technology, but did not highlight arge-scale agricultural imports from the US.
An aside: ;Trump again and again insists on including unachievable levels of foreign purchases and/or investments in his trade “deals”. They also seem to be so loosey-goosey as to be unenforceable. For instance, the EU agreed to invest $600 billion in the US, and soon admitted it could not deliver. It was the private sector that would have to commit funds and the EU could not compel that. So ignore the “$500 billion buy” part of Trump’s patter on his beautiful India agreement.
From Bloomberg in Trump’s Surprise Trade Deal With India Resets Fractured Ties:
The US will cut its levy on Indian goods to 18% from 25%, lower than most Asian peers, while an additional 25% punitive duty tied to purchases of Russian oil was scrapped. Trump said Modi had agreed to buy $500 billion of US goods, cut its tariffs to zero, and halt crude purchases from Russia, a key demand of the US president.
Aside from the new tariff rate, Modi didn’t confirm the details of the deal, and like Trump’s other trade announcements, much could change. Even so, the agreement was hailed by officials from both sides and cheered by investors….
The previous 50% US tariff rate, in place since August, had hurt India’s labor-intensive industries, undermined its appeal as a manufacturing and export hub, and soured ties between the two countries. India’s currency was Asia’s worst performer against the dollar last month, weighed down by concerns over the lack of a US trade deal.
Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.
When two large economies and the…
— Narendra Modi (@narendramodi) February 2, 2026
Here in tourist-dependent Thailand where Indians are big visitors, the press had taken note of the weakness of the rupee, not just recent but longer-term lows. And it has indeed strengthened against major currencies thanks to the “deal.” The Financial Times headlined that the rupee scored its biggest one-day increase in seven years:
The Russia-hostile Financial Times focused on Modi conceding to Modi on the Russian oil front in Trump to slash India tariffs after Modi ‘agrees’ to stop buying Russian oil:
Donald Trump said the US would lower its tariffs on India to 18 per cent after Prime Minister Narendra Modi “agreed” to halt purchases of Russian oil, ending months of trade friction between the countries….
On Monday, US officials, including Washington’s new ambassador to New Delhi, Sergio Gor, indicated that since India had agreed to stop buying Russian oil, the punitive 25 per cent levies would be removed, bringing down the overall tariffs on the country from 50 to 18 per cent….
India bought just $41.5bn worth of goods from the US last year, he said, “so there’s no way it’s going up to $500bn, particularly when Trump is only talking about goods trade”, said Pratik Dattani, founder of the Bridge India think-tank.
He added that while India had already started to reduce oil purchases from Russia, they were unlikely to be eliminated entirely, given the country’s relationship with Moscow. India had become the biggest buyer of cheap seaborne Russian crude since the full-scale war in Ukraine started in 2022.
Kevin Walmsley, in his latest post, pointed out that the Venezuela crude that Trump had so proudly seized was suffering from a want of demand. From US traders struggling to find buyers for Venezuelan oil, as China shifts supply chain to Canada:
Following the US takeover of the Venezuelan oil industry, commodities trading firms were given contracts to market the crude to buyers across the world, including to China.
But Venezuelan crude oil is now being sold at far higher prices than before, with the profits routed through US companies and energy traders.
The higher prices have pushed Chinese refiners out of the market for the heavy crude from Venezuela, and they are shifting their orders to Canada, Russia, and Iran.
Canadian tar sands oil is more expensive than Venezuelan heavy sour, but is similar, and offers far shorter transit times and lower shipping costs.
India had repeatedly, indeed almost piously, insisted that its oil purchases were driven by national needs, and getting the best price was important, hence the attraction of Russian crude.
An additional issue for India is that it isn’t clear how many of its refineries can readily process the particularly heavy and sour Venezuela crude, My understanding is that Russian crude is medium heavy, so Venezuela’s oil would not be fungible for that. But it is going to take time to increase Venezuela’s output, even charitably assuming that happens, and so India may not wind up on the hook for all that much in the way of purchases.
Despite India’s currency and stock market welcoming the trade “deal” news, reactions on Twitter suggest ordinary Indians are much less happy:
Elect clowns, enjoy the circus.🤡
>Left the Chabahar port.
>Agreed to “Buy American.”
>Stopped buying Russian oil.
>Stopped buying oil from Iran.
>Started buying oil from the U.S.
>Opened India’s agriculture market.
>Reduced tariffs on U.S. goods to 0.These spineless clowns… pic.twitter.com/utBG5NDR9k
— Mohit Chauhan (@mohitlaws) February 3, 2026
Before :
– Indian tariff on US goods : 15~70%
– US tariff on Indian goods : 2~3%Now :
– Indian tariff on US goods : 0% 🔽
– US tariff on Indian goods : 18% 🔼How even an outright Id!ot also can think this #TradeDeal is beneficial for India? 🤡
— Veena Jain (@Vtxt21) February 3, 2026
This is what surrender looks like.
Modi didn’t negotiate, he bent.
Stopped buying Russian oil, agreed to buy American, cut tariffs for the US.Foreign policy is reduced to personal flattery.
The national interest sold for Trump’s praise.#indiaustradedeal pic.twitter.com/ZgSCVs7q8c
— Prashant Kanojia (@KanojiaPJ) February 2, 2026
Today the ‘Tamasha Mantri’ was garlanded for reaching a trade agreement with the President of the United States. What he said is that he was able to successfully reduce the tariffs from 25% to 18%.
But half-truths are worse than a lie.
Among the things he did not tell the…
— Pawan Khera 🇮🇳 (@Pawankhera) February 3, 2026
Modi had promised he would never sacrifice the interests of Indian farmers, cattle rearers, and fishermen.
But That promise has now been abandoned by opening Indians markets to American agricultural products.
He has thrown Indian farmers under the bus 💔pic.twitter.com/KgIx6BimMf
— Dr Nimo Yadav 2.0 (@DrNimoYadav) February 3, 2026
So keep in mind that even if India cuts tariffs or other trade barriers to US agriculture only on some food categories, Modi will still have reneged on his promise to protect Indian farmers.
Finally, BRICS boosters should take note. Even though we have pointed out that the continued decline in US political and economic pawer was baked in, we have also repeatedly said that BRICS enthusiasts were way out over their skis. Even casual readings of BRICS declarations have shown that its members want to preserve major Western institutions such at the IMF, World Bank, and WTO, and also want to preserve trade and investment relations with the West.2 Despite very rough treatment by Trump, Modi has reaffirmed the importance of the US to India, and as important, pulled back from Russia with his commitment to further reduce oil purchases. The US made be fading but it is far from spent, and even powerful nations like India are acting accordingly.
______
1 From a November post, on the impact of a Supreme Court loss:
Again, this whistling past the graveyard claim that Trump could use other trade powers ignore that they are much more limited. The two main fallbacks are the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. The former allows the president to impose tariffs unilaterally of up to 15% for up to 150 days to address significant trade imbalances. That’s cold cheer when Trump average tariff now is 17.9% and when he’s imposed some of his tariffs on countries that run deficits with the US, such as Brazil, where Trump’s big reason was personal pique over Brazil’s refusal to cut incarcerated former president Bolsonaro some slack.
Under Section 232, Trump can invoke a national security risk, such as he has for aluminum and steel. But the Administration needs to have the Commerce Department conduct an investigation substantiating that claim in advance….
Now to some of the effects if Trump loses. Mind you, this list is not exhaustive.
Emasculation of Trump’s Hyper-Aggressive Foreign Policy
Tariff bullying and gaslighting has been, far and away, the biggest implement Trump has used in making threats and demand of other nations, including repeatedly punishing one-time close allies like Canada and Japan just so show who is boss. Confirming that these tariff threats are much more about shows of dominance than getting anything positive accomplished, former ambassador Chas Freeman has recounted that when other countries show up for the trade talks that Trump has forced on them, the US side has no proposals but demands, Mafia-shakedown-style, what they can offer. Nothing is committed to writing, which means the US side can and has retraded these verbal commitments (see the UK for one of several instances). And the US has also gotten its interlocutors to commit to multi-hundred-billion investment commitments, which (ex maybe the Saudis) are clearly not feasible, and the browbeaten country usually ‘fesses up to that in fairly short order.
But the impact may go beyond the loss of pawer. Trump relished the way he used tariffs to make national leaders grovel….
In theory, the Administration could go hat in hand to Congress to get approval for something approximating the current tariffs, say at current levels but denying Trump the power to change them willy-nilly. But with Trump’s popularity in polls plunging, consumers and small businesses unhappy with the tariffs, and the Republicans getting whacked with high profile and unexpected-in-severity election defeats, Congresscritters will not be kindly disposed towards bailing Trump out.
2 Consider also further evidence of a widely-discussed potential to BRICS solidification, which is India’s concern that BRICS will become a vehicle to further China’s economic dominance, in the lead OilPrice story, India Pours Over $10 Billion Into Rare Earths to Cut China Dependence.
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Maybe Trump offered him a special helicopter ride to meet Maduro…
Given Trump’s history of lies, bluster, and fake deals, I think we have to at least consider the null hypothesis here.
Namely, that there is no deal. Just a Truth Social post, and vague non-committal words from Modi.
With nothing in writing, there really is nothing to analyze here other than words. And we know that Trump needs to show dominance, even if it’s only for a fleeting moment. Further circumstantial evidence that this is all a lie is the EU-India trade deal just announced last week.
Gotta agree with you here that this might be mostly Trump bluster and bs and no published treaty to back up his words. If this was all true, it would be tantamount to a total Indian surrender and I am surprised that there is no mention of India’s purchases of Russian weaponry. Just in India’s agricultural sector alone you would get major pushback from India’s farmers and Modi’s approval would drop to Keir Starmer levels. I guess that we will have to wait to see the terms of the actually treaty but JHC, who did the negotiating for Modi? Ursula von der Leyen?
It appears you did not read the post in full. It includes former Ambassador Chas Freeman reporting that this was how the Trump Team operates:
And Modi confirmed there was a deal of some sort. Full text of the tweet we embedded above:
Well, I tried to read it in full. I didn’t see the direct quote from Modi until your reply, having missed that in the twitter/X link (sometimes those don’t load in my browser due to security concerns.)
Looking at the quote now, my characterization of Modi’s words as “vague and non-committal” fits. I read it as giving Trump thanks, with a lot of flowery praise but no actual details on what was actually agreed to. In fact, Modi’s statement is consistent with simply thanking Trump for unilaterally dropping tariffs on the US side, with zero concessions on India’s part.
(Not saying that is what is going to happen, or that there couldn’t be a hand-shake deal with concessions by India that Modi conveniently failed to acknowledge, just pointing out that Modi’s words appear to be puffery to appeal to Trump’s ego.)
Spot on! That’s what I thought too. Narrratives, PR, appearance…those are the main US business. Besides, India is gonna be the president of BRICS this year. That means there will be wide window of opportunity to replace trade with the US in jeopardy because of tariffs. Let’s wait and see. Those social medias are not known for their accurate portrait of reaity.
You are probably right?
Also perhaps foreign leaders have trouble sizing up the Trump that we Americans know so well as a bag of wind. He is certainly willing to employ power and violence but does so ineptly as with his “obliteration” of Iran’s enrichment or the jackboots in Minnesota.
Meanwhile the list of those who just want to see him gone lengthens. I read that the Europeans despise him and his polls here continue to drop. His pathetic desire to leave monuments to himself–like that triumphal arch–reveals someone with a deep inferiority complex and resentment toward those calling him a “vulgarian.” In current America the lunatic is truly running the asylum.
Can’t wait how Helmer is going to spin this one since he likes to regurgitate from the two retired Indian clown-generals the line how nationally independent India is
I’m waiting to see what M. K. Bhadrakumar has to write about this. His work often appears on Indian Punchline.
I think Indian Punchline is Ambassador’s Bhadrakumar’s personal blog
Former ambassador, but yes.
Oil. What I can find is that India was buying about 2 mpd from Russia.
Venezuela is producing under 1 mbd of which it seems Trump has said a whole bunch of countries are buying.
And russian oil is quite different to Venezuela oil, does India have the refining capacity?
As to the us supplying we don’t have that kind of surplus.
It seems highly unlikely much oil from Venezuela will actually go to India.
One of the things BRICS and China have introduced is its digital money system bypassing swift. It’s a big change to bypass swift.
I would not believe a word coming out of the current US government unless it was corroborated by a more reliable source.
Yes, count me as cynical.
1. Modi has confirmed that there is some sort of an understanding.
2. The Hindu, quoting Indian officials, confirms that agriculture is part of the deal. From India-U.S. trade deal LIVE: Sensitive sectors of agriculture and dairy have been excluded from the U.S. deal, says Commerce Minister Piyush Goyal:
https://www.thehindu.com/business/Economy/india-us-trade-deal-the-hindu-live-updates-reactions-details-tariffs-trump-modi-february-3-2026/article70585870.ece
Piyush Goyal, Commerce Minister of India and lead negotiator for India, just now did a Press Conference. He noted that “sensitive dairy and agriculture sectors” have been protected. The question is what exactly comes under sensitive agriculture sector – for sure, it would include wheat, corn, etc. But I suspect India may buy more of items either not grown enough in India or are of inferior quality (blueberries, cranberries, almonds, etc.).
There is also the matter of over how long a period the $500 billion will be purchased. It looks like it will be over a period of 6-7 years, and will include military items that anyway would have been bought from the US.
I hope this is just bluster. If India starts letting in US agricultural goods with no tariffs, the world is going to start seeing a lot of dead Indian farmers.
I just hope H1B isn’t going to end up back in play. Program changes were very long overdue.
We have reached a strange place in international politics, as the announcement of an agreement immediately draws out speculation about what was actually agreed, if anything. And there is no way to know, either. Keeping agreements is not very popular. Empty promises are having a grand time. And after the promises everyone just keeps doing whatever they can get away with. Since all seem to be in on the emptiness of promises, the harm is less. What kind of oaths will be needed to bring back actual agreements? Bible and honour have lost their power, mafia-style justice reigns.
It’s funny, I look back to the time of NAFTA and GATT as “the good old days.”
Even if those agreements were harmful to the country, at least they were negotiated in a clear and semi-transparent way. And they resulted in actual written agreements that were published and could be read from the Congressional record.
Now, all we get are empty promises, lies, puffery, and bluster. As you say, the harm is less. But the destruction of trust is enormous.
Worth reading:
https://x.com/TheNavroopSingh/status/2018682674085581081?t=7hv8q2hWTjDyN_eKdHrRVQ&s=08
Modi is like Erdogan in that he thinks he can play both sides simultaneously and gain advantages from each side. He will soon learn that he will have to choose a side – a declining American empire that still is a vital destination for Indian labor exports or the collective non-aligned nations that likely have a brighter future vs the American empire. If India jumps fully onto the slowly sinking American vessel it may find itself with no available lifeboats when things become difficult.
It may very well be folly, but you have to look at the fact that India has a GDP bigger than Japan, UK and France. It will likely become a bigger economy than Germany in a few years, next only to US and China. They just signed a trade deal with EU.
https://www.bbc.com/news/articles/crrnee01r9jo
Not unlike Turkey, it is located in a place where keeping distance from rival power blocs works to its advantage right now. Being a massive country right beside China means everyone who wants a counterbalance against China’s rise and growing power has an interest in maintaining good (or at least decent) relations with India. This includes not just the US and it’s allies. Even countries like Russia, the Middle East Oil monarchies and South East Asian countries want to be friendly with India. Just look up how many honors the Arab nations have showered on Modi in recent years. India plays both sides because it has that luxury right now. It’s certainly not falling into the American orbit – it buys S-400 missile defence batteries from Russia and got the USA to give a sanctions waiver.
No one knows how long this game will last, but that’s another day, another time.
1. India’s top agricultural products are Wheat, Rice, Maize (corn), Bajra (a millet), Sugarcane and Dairy products. You can add oilseeds to this.
https://www.upag.gov.in/ has detailed statistics.
2. Top US farm exports are Soybeans, Corn, Beef, Tree nuts and Pork products. Dairy comes in at sixth.
https://www.fas.usda.gov/sites/default/files/2025-05/2024-Final.pdf
3. India has a strong regulatory requirement that animals producing dairy products should not be fed animal meat or blood. This is linked to Hindu religious sensibilities, because vegetarian Hindus consume Dairy products a lot.
https://www.indiatoday.in/india/story/india-us-trade-talks-dairy-agriculture-animal-feed-ban-milk-imports-religious-sensitivities-job-loss-2755700-2025-07-15
4. India has started a foodgrain-to-ethanol program to reduce dependence on oil imports (or at least to slow down the rise in dependence).
https://www.niti.gov.in/sites/default/files/2025-07/Roadmap-For-Ethanol-Blending-In-India-2020-25.pdf
Putting this all together, one can guess how the deal has shaped up, or likely to shape up when it comes to agricultural trade:
– India probably won’t budge on the Dairy products part.
– They are likely to accept corn imports if they are intended for ethanol production.
– Soybeans, Tree nuts, Pork: they may not have much issue. Soybeans is a
– Beef: This is tricky because the current government has an ideological policy against cow slaughter. They would not want to be seen as allowing beef from cows slaughtered in other countries to be imported. But again, India actually produces and exports beef from buffaloes, so they may decide it’s worth the heat.
This is extremely helpful. Thanks for this assessment. We had mentioned the dairy products rules in an earlier post and were remiss in not mentioning them again
Here is an admission against interest from CNN that India is still buying Russian crude, and will for the foreseeable future:
https://www.cnn.com/2026/02/03/business/venezuela-oil-russia-india-trump-tariffs
Funny how suddenly, journalism makes a comeback. Maybe they just enjoy poking the Trump administration in the eye with a sharp stick more than they do propagandizing for them.
For a week or so, perhaps, and then he’ll quietly go back to buying the cheaper and more reliable Russian oil. Modi is far smarter than Trump, and knows how to play him.