Outlook India - 11 February 2020
US-India likely to finalize trade, defence deal during Trump visit
After signing a trade deal with China, the US is likely to finalize a trade agreement and a defence deal with India during the visit of President Donald Trump and First Lady Melania Trump later this month.
Sources said the Modi government is in the process of approving the purchase of 24 MH-60R Seahawk helicopters from the American defence firm Lockheed Martin for $2.6 billion, ahead of Trump’’s two-day visit on February 24.
The US and Indian officials are also working on a limited trade deal which will address some of Trump’’s complaints against India’’s high tariffs on US imported goods, sources said. The US is India’’s second biggest trade partner.
The bilateral agreements are aimed at strengthening the US-India strategic partnership and the personal rapport between President Trump and Prime Minister Modi in Houston last year has further fortified the relationship, sources said.
Acknowledging this, an official US statement about President Trump’’s visit to India said, "During a phone call over the weekend, Trump and Modi agreed that the trip will further strengthen the US-India strategic partnership and highlight the strong and enduring bonds between the American and Indian people." The US President and the First Lady are also visiting Gujarat, Prime Minister Modi’’s home state.
Interestingly, the US after several rounds of negotiations, signed a trade deal with China earlier this month, with Beijing having committed to buying an additional $200 billion worth of US goods and services by 2021.
While the US has retained most of the tariffs on Chinese goods, China is expected to reduce some of its tariffs on US goods. The US has threatened to penalize China if it fails to meet the terms of the agreement.
In his last election campaign, Trump had promised to revisit US trade deals with its key trading partners in order to reduce trade deficit, generate employment and revive American economy.
President Trump is running for re-election in November later this year. He was recently acquitted by the US Senate in his impeachment trial over the allegation of illegally seeking help from Ukraine to influence the forthcoming presidential elections in November.
"If President Trump manages to get a trade deal with India which is win-win for both the countries, he will go back home to a consolidated vote base," a source said.