Is the hug about to get tighter? Modi and Trump sit down for crunch trade and arms talks

• Trump announced a $3 billion arms deal during the rally but the recent collapse of trade-talks is what is likely to make headlines
• Modi is unlikely to grant free market access to US dairy goods which would cause millions of Indian farmers to go out of business
• Trump wants to reduce the trade deficit and India will most likely agree on higher imports of US oil and gas during the showdown talks to help

Trump’s visit to India marks the fifth by a US President in past twenty years. That is one more than the total number of visits between 1947 and 1999. It is no secret that Washington and New Delhi’s strategic relations have strengthened in recent times but with Trump entering election year and many back home “feeling the Bern”, his voter-base expects American interests to come first in any deal with India.

Trump announced during the rally on the first day of the visit that a $3 billion arms deal will be agreed in principle between the two allies but the recent collapse of trade-talks is what is likely to make headlines. The showdown talks will revolve around farm goods, digital trade, medical devices and most importantly tariffs.

When Trump labeled Modi’s India as the “Tariff King” early last year, he referred to the restricted free market access US goods have in the Asian nation.

Modi, while objectively fond of the US President, is unlikely to grant all of his wishes as granting free market access to US dairy goods would destroy the livelihood of millions of Indian farmers.

India has its share of demands as well. India will ask for the restoration of the Generalized System of Preference which is a US Tariff program that allows duty free imports of thousands of products from designated countries. India will also look to overturn the tariffs on steel and aluminum imports which became active this February.

These friends may have differences but the two parties are unlikely to walk away without some semblance of a trade deal due to the importance of the visit to both Modi and Trump. Trump knows the importance of the American-Indian diaspora in the 2020 elections whereas Modi is looking to take India’s economy out of its slump.

Simply put, Trump wants to reduce the trade deficit and India will most likely agree on higher imports of US oil and gas during the showdown talks. In return, it is expected that the US will back-down on its dairy access demands. As a silver lining, this limited deal will be announced with a view for a future major trade deal between the two allies.