External Affairs Minister S Jaishankar on Sunday underscored the need for India and the United States to reach a comprehensive trade understanding, citing both economic and strategic imperatives. Speaking at the Kautilya Economic Forum in New Delhi, Jaishankar said that while India and the US enjoy a strong partnership, they have yet to “reach a landing ground” in ongoing trade discussions.

‘There must be a trade understanding with the US’

Addressing a panel moderated by N K Singh, Jaishankar emphasised that an agreement was essential not only because the United States is the world’s largest market, but also because much of the world already has such trade arrangements with Washington.

“I deal in a world of realities, and my reality right now is at 25 per cent and 25 per cent of a 50 per cent tariff, and that is what right now we are negotiating. So, whatever happens at the end of the day, there has got to be a trade understanding with the United States,” he said. “There has to be one because it is the world’s largest market but also because much of the world has reached those understandings. But it has to be an understanding where our bottom lines, our red lines are respected.”

Tariff tensions and trade negotiations

Jaishankar acknowledged that tariff-related frictions remain a major sticking point. “We have issues with the United States that we haven’t yet arrived at a landing ground in our trade discussions. There are certain tariffs being levied on us, which we have publicly said are unfair,” he noted.

He added that a second set of US tariffs had targeted India for sourcing energy from Russia, even though several other nations with more antagonistic ties to Moscow continued similar trade practices.

Terming the trade relationship “one-sided,” former US President Donald Trump had imposed 50 per cent tariffs on India, citing crude oil imports from Russia as the rationale. The new reciprocal tariff rates by the US Customs and Border Protection (CBP) came into effect on August 27.

“There are problems, there are issues, nobody is in denial of it. Those issues need to be negotiated, discussed, and resolved,” Jaishankar said, urging that trade differences not be allowed to affect the broader strategic relationship between the two democracies.

Progress on free trade talks

The remarks come shortly after Commerce and Industry Minister Piyush Goyal’s high-level visit to Washington last month, which the ministry described as “positive.” Both sides agreed to accelerate efforts toward an early and mutually beneficial conclusion of the proposed trade pact, according to an official statement.

Jaishankar said conversations have also expanded to include discussions on diversifying India’s trade profile and aligning more closely with Asia. “Most of our initial free trade agreements were actually almost all with Asia — with ASEAN, Japan, and Korea,” he said.

Balancing trade with Asia and beyond

However, Jaishankar acknowledged that many Asian economies are direct competitors to India and, through integrated supply chains, have inadvertently opened wider access for China. “The challenge today is that in many ways these are economies which are competitive. And because of the supply chain nature, they’ve also provided a pathway for China,” he noted.

To counter this, he stressed the importance of pursuing FTAs with non-competitive, stable, and predictable markets. “Our focus should be on FTAs with economies that are not competitive, where there is a deep, sustainable, predictable and real market economy at work. That is why we are very pleased with the UK FTA, serious about an EU FTA, and striving for an understanding with the United States,” he said.

Strategic shift in India’s trade priorities

Jaishankar’s comments highlight a strategic recalibration of India’s trade priorities, with New Delhi now seeking long-term, equitable partnerships that support domestic growth while aligning with global realities.

He added that while the current global environment remains volatile, it is also a period that will test every nation’s economic and strategic resilience. “There are challenges, yes, but also opportunities for countries that stay balanced and pragmatic,” he concluded.