India has halted negotiations on a bilateral trade agreement with the United States, adopting a wait-and-see approach following President Trump’s new Section 301 investigation into alleged manufacturing overcapacity in 16 countries, including India.
Background of Stalled Talks
A preliminary understanding reached in February 2026 aimed for an interim deal slashing US tariffs on Indian goods from 50% to 18%, with India pledging to curb Russian oil imports, cut duties on US products, and commit to $500 billion in American purchases. The US Supreme Court’s late February ruling invalidating broad tariffs disrupted momentum.
Impact of New US Probe
The Section 301 inquiry targets “structural excess capacity,” prompting New Delhi to reassess concessions amid relaxed tariff pressures and Trump’s preoccupation with the Iran war. While India reduced but didn’t halt Russian crude, US officials push for increased American energy buys to ease global shortages.
Future Outlook
Commerce Ministry sources indicate no substantive talks since the court decision, with a comprehensive pact now slipping months. Trump maintains expectations of Indian compliance for mutual gains, but India’s diversification strategy strengthens its bargaining position.
