The financial relationship between India and the USA is extensively seen pretty much as good for either side. Two-way commerce is rising and, alone amongst Asian international locations, India routinely trades extra with the USA than it does with China, its neighbor and rival.

But below President Trump, commerce is some extent of friction. Like just about all international locations that do enterprise with the USA, India runs a surplus: Final yr it shipped about $87 billion value of products and imported $42 billion, including $46 billion to America’s commerce deficit.

Mr. Trump doesn’t like these sorts of figures. He has railed in opposition to international locations that promote extra to the USA than they purchase. Cue his livid imposition of tariffs on each allies and foes, scary threats of retaliation and unsettling world commerce.

Throughout his first time period, President Trump known as India “the tariff king.” He pointed to Indian duties as excessive as one hundred pc on some American items. He was notably targeted on a tariff he mentioned was blocking Harley-Davidson from exporting extra bikes. When India’s commerce officers diminished that tariff, Mr. Trump paraphrased them: “ ‘We wish to maintain your president glad.’ Isn’t that good?”

This week, when Mr. Trump sits down in Washington with Narendra Modi, India’s prime minister, tariffs are anticipated to be a subject of dialog once more. Right here’s what you could know concerning the buying and selling relationship between India and the USA.

Is India actually profiting from American commerce?

India’s commerce surplus with the USA has been rising below Mr. Modi, who took workplace in 2014. What had been about $20 billion to $24 billion yearly shot as much as $33 billion in 2021. However importantly, back-and-forth commerce between the 2 has been rising at the same price: As a share of the entire, the excess has stayed almost regular.

India has a sophisticated listing of tariffs. There are lots of of classes taxed at completely different charges, which might change wildly from yr to yr. That could be a legacy from India’s colonial period, when Britain used commerce practices in exploiting its sources.

Since 1990, when India oriented its economic system extra to world commerce and funding, the common tariff price has fallen, from 125 % to beneath 5 % on most items imported from the USA.

Not like most Asian international locations, India has its personal commerce deficit to fret about. The USA has the world’s greatest, at $1.2 trillion, however that quantities to lower than 4 % of its economic system. Richard Rossow, who follows India on the Middle for Strategic and Worldwide Research in Washington, identified that India, which will depend on imports for many of its gas wants, runs a deficit value between 8 and 12 % most years. That has pushed down the worth of India’s foreign money, the rupee, to painful ranges.

What does India commerce with America?

Most of what these two international locations commerce falls below the class of oil and petrochemicals, or that of gems. In each instances, the USA ships huge portions of uncooked or semi-processed materials to India, the place refineries or gem-cutters course of them of their workshops. In some instances, the completed items go proper again to the USA.

Different vital elements of their financial relationship embody the commerce in companies, together with monetary funding and high-end skilled work that’s being achieved for American firms by employees sitting in India. However Mr. Trump has targeted on commerce in items.

What may India do to fulfill Trump?

That leaves solely a little bit of wiggle room for the 2 leaders. “Going again to the primary Trump administration, getting India to purchase extra U.S. hydrocarbons was prime of the listing, together with protection gadgets,” Mr. Rossow mentioned. Final week, Mr. Trump claimed a victory after assembly with Japan’s prime minister, Shigeru Ishiba, saying he had agreed to import extra liquefied pure gasoline.

India has spent between $1.5 billion and $4 billion on American protection imports lately, and would have bother taking over costly new techniques, like fighter jets. It has excellent orders from Russian and French suppliers. Nonetheless, weapons and gasoline, which India’s nationwide authorities should purchase by itself, maintain promise as a solution to tamp down the commerce imbalance.

There’s some room for India to make choices on tariffs. American producers of bourbon and pecans are hoping that Mr. Trump would possibly knock down commerce boundaries protecting them from Indian shoppers. Related restrictions on poultry and California almonds have already been eased. Indian demand for such items is minimal, however in commerce negotiations, a decrease tariff is a decrease tariff.

Then, after all, there may be Milwaukee-based Harley-Davidson. The corporate’s heavyweight bikes are hit by 50 % tariffs on their solution to India, although as of Might 1, that can decrease to 30 % after a latest change by Mr. Modi’s authorities. Since 2020, Harley had exported only some hundred bikes a yr to India. Final yr, it teamed up with a neighborhood producer, devised a mannequin that retails for round $3,000, and offered greater than 14,000. However none of them counted as imports.