India’s agricultural trade with the United States has been characterized by a diverse range of exports and imports. India’s primary exports to the US include prawns, marine products, rice, coffee, tea, spices, gum, resins, medicinal plants, and various vegetables. Meanwhile, India’s key agri-imports from the US comprise almonds (both in shell and shelled), undenatured ethyl alcohol, walnuts, cashews, apples, pistachios, and other nuts.
The United States is the world’s largest exporter of agricultural products, with exports exceeding $175 billion in 2023, accounting for an 8.5% share of global agricultural trade. Despite only 1.2% of its population being employed in farm-related activities and agriculture contributing a modest 5.6% to its GDP, the US maintains its position as an agricultural powerhouse.
India enjoys a favorable trade balance in agricultural trade with the US. In 2023, India exported $5.1 billion worth of agricultural products to the US while importing $1.4 billion. However, the trade dynamics between the two nations are influenced by broader geopolitical and economic shifts, particularly under the policy changes introduced during Donald Trump’s presidency.
The Trump Era and Its Impact on Global Trade
Donald Trump’s ‘America First’ doctrine resonated with millions of American voters who supported his vision to revitalize the economy and prioritize domestic interests. His trade policies leaned heavily on mercantilist principles, advocating for increased exports, reduced imports, and minimized trade deficits. Trump’s approach often emphasized hard negotiations and bilateral trade deals over multilateral agreements.
Despite modern economic theories championing free trade, Trump’s policies reflected widespread skepticism among Americans about the benefits of globalization. His administration pursued protectionist measures, often criticizing global trade frameworks such as the World Trade Organization (WTO). Trump announced plans to impose tariffs of 10–20% on imports, with even steeper rates—up to 100%—for countries not trading in US dollars. Additionally, the US imposed some of the world’s highest tariffs on agricultural products, including cereals (193%), dairy products (188%), and fruits and vegetables (132%), according to WTO’s World Tariff Profiles 2023.
Pressure on India’s Dairy Sector
During his presidency, Trump repeatedly pressured India to open its dairy sector to US exports. India’s dairy industry, a vital sector contributing significantly to rural livelihoods and national food security, has traditionally been protected from foreign competition through high tariffs and stringent regulatory standards. The US has long sought to access this lucrative market, advocating for reduced tariffs and relaxed restrictions on American dairy products, including those made from animals fed on diets not permissible under Indian religious and cultural norms.
The Indian government resisted these demands during Trump’s tenure, citing domestic sensitivities and the need to safeguard millions of small and marginal dairy farmers. However, such pressure is expected to persist in future negotiations, necessitating careful balancing between domestic priorities and international trade commitments.
India’s Strategic Importance
India, with its vast market of 1.42 billion people and status as the world’s fastest-growing large economy, holds significant appeal for the US as both a trade and strategic partner. India is a major importer of US agricultural goods, particularly tree nuts like almonds, walnuts, and pistachios, as well as apples, pulses, and edible oils.
While the US views India as a crucial ally amid its ongoing trade tensions with China, bilateral trade relations remain fraught with challenges. The US has consistently pressured India to reduce tariffs and provide market access for sensitive sectors, including dairy and meat products.
Navigating Trade Challenges
India’s ability to navigate the complex trade landscape under the Trump administration—or any future similar scenario—requires a robust strategy. This involves:
- Comprehensive Research: Data-driven analyses to effectively defend India’s trade interests in bilateral and multilateral forums.
- Proactive Diplomacy: Strengthening trade negotiations to ensure mutually beneficial outcomes without compromising domestic interests.
- Strategic Partnerships: Leveraging India’s economic growth and large consumer market to attract US investments while safeguarding critical sectors like agriculture and dairy.
As the global trade environment continues to evolve, India must remain vigilant and prepared to adapt to emerging challenges while advancing its economic priorities.