US Under Secretary of State for Economic Affairs, Jacob Helberg, has revealed that Prime Minister Narendra Modi and President Donald Trump have established an ambitious target to elevate bilateral trade between India and the United States to 500 billion dollars.

This announcement came during a congressional hearing in Washington, DC, where Helberg voiced robust optimism about the trajectory of economic ties between the two nations.

Helberg highlighted the administration's commitment to a "maximum pressure" strategy against Russia, with the explicit aim of concluding the war in Ukraine. He noted that this policy incorporated secondary sanctions, which initially impacted several Indian interests. Nevertheless, these measures have paved the way for constructive resolutions through recent bilateral engagements.

A pivotal joint statement on trade has emerged as a cornerstone of this progress. It encompasses India's historic procurement of energy from the US and substantial cross-border investments. Helberg emphasised that this agreement, reached in the early months of Trump's administration, underscores the strengthening partnership.

The framework for an Interim Agreement on reciprocal and mutually beneficial trade marks a significant milestone. It reaffirms both countries' dedication to ongoing negotiations for a broader US-India Bilateral Trade Agreement (BTA), initiated by Trump and Modi on 13 February 2025. This larger pact promises enhanced market access and fortified supply chains.

Under the Interim Agreement, India has committed to eliminating or reducing tariffs on a range of US industrial goods, foodstuffs, and agricultural products. In reciprocity, the US will impose an 18 per cent tariff on select Indian-origin goods, pursuant to an existing executive order. These tariffs include provisions for removal once the full agreement is finalised.

This development unfolds against a complex backdrop involving US judicial intervention. Last Friday, the US Supreme Court ruled 6-3 against the bulk of Trump's expansive tariff initiatives. The court determined that the administration overstepped its authority by invoking the International Emergency Economic Powers Act (IEEPA) of 1977 to enact widespread import tariffs, asserting that taxation powers rest primarily with Congress.

In response to the ruling, Trump promptly signed an executive order instituting a 10 per cent global tariff on imports from all countries, set to take effect almost immediately. He characterised this as a temporary import surcharge, permissible under Section 122 of the Trade Act of 1974 for up to 150 days, to rectify balance-of-payments deficits.

Trump subsequently escalated the tariff to the maximum legally tested level of 15 per cent, effective without delay. In a post on Truth Social, he lambasted the Supreme Court's decision as "ridiculous, poorly written, and extraordinarily anti-American." He assured that his administration would soon devise new, compliant tariff measures to advance the "Make America Great Again" agenda.

For India-US relations, these shifts introduce both opportunities and challenges. The 500 billion dollar trade goal signals deepening economic integration, potentially boosting sectors like energy, defence, and technology—areas of mutual strategic interest.

India's tariff concessions on US goods could enhance access to advanced machinery and agricultural inputs, supporting its indigenous manufacturing push under initiatives like Make in India.

Yet, the US's global tariffs, including the 15 per cent surcharge, may exert pressure on Indian exports such as textiles, pharmaceuticals, and IT services. Analysts anticipate that the reciprocal 18 per cent tariff on certain Indian products under the Interim Agreement could be offset by the BTA's broader commitments, fostering resilient supply chains amid geopolitical tensions.

Helberg praised the US ambassador to India for exemplary performance in navigating these dynamics. This diplomatic effort aligns with broader US-India convergence on issues like countering Russian influence and securing energy supplies, especially as India diversifies away from traditional dependencies.

The trade framework also reflects strategic hedging. With Trump's "maximum pressure" on Russia affecting Indian energy imports, the historic US energy purchases provide India with alternatives. This could stabilise prices and reduce vulnerabilities, while cross-border investments—likely in semiconductors, renewables, and defence—bolster long-term ties.

Looking ahead, the BTA negotiations hold promise for addressing non-tariff barriers, intellectual property, and digital trade. Success here could propel bilateral trade from current levels—around 200 billion dollars annually—towards the 500 billion dollar milestone within a decade, per optimistic projections.

However, domestic politics in both nations pose risks. In the US, congressional oversight and court challenges may temper tariff ambitions. In India, balancing protectionism for local industries with global integration remains key, particularly amid elections and economic recovery efforts.

Geopolitically, this pact reinforces the US-India quasi-alliance against shared threats, including China's assertiveness in the Indo-Pacific. Enhanced trade flows could underpin joint ventures in aerospace, missile defence, and quantum technologies, aligning with India's defence modernisation goals.

Helberg's remarks illuminate a pivotal moment in US-India economic diplomacy. The 500 billion dollar trade aspiration, Interim Agreement, and resilient frameworks signal confidence amid tariff turbulence and global realignments.

ANI