From Tariffs to Trust: Can a Trade Deal Become a Strategic Partnership? S Jaishankar Thinks So
- Joydeep Chakraborty
- 4 days ago
- 4 min read
Updated: 2 days ago
The trade deal laid the road, and Dr. Jaishankar's US visit chose the direction.
Coming on the heels of a hard-won India–US trade breakthrough, New Delhi’s top diplomat arrives in Washington with more than a schedule. He represents a strategic reset.
External Affairs Minister Dr. S. Jaishankar’s visit to the United States from 02–04 February 2026 lands at a moment of unusual clarity in India–US relations. A bruising phase of tariff escalation has given way to a negotiated trade settlement, one that both sides now want to convert into something sturdier than temporary relief.
Officially, the visit is anchored around India’s participation in the Critical Minerals Ministerial, convened by U.S. Secretary of State Marco Rubio. Strategically, however, the trip reflects a broader objective of embedding the newly announced India–US Trade Deal into a durable economic and geopolitical framework. This is diplomacy with intent. Not ceremonial, not reactive, but deliberately sequenced.
From Tariffs to Trust: A Trade Reset Takes Shape
The trade deal laid the road; the visit chose the direction. Under the agreement, the United States sharply reduced reciprocal tariffs on Indian goods from an effective 25–50 percent to about 18 per cent, while also lifting additional punitive duties linked to India’s earlier Russian oil purchases. India, in turn, is committed to lowering select tariff and non-tariff barriers and expanding imports of U.S. goods across energy, defence, aviation, and advanced manufacturing.
For Indian exporters, the impact was immediate and visible. After U.S. tariffs on Indian textiles were slashed from nearly 60 percent to 18 percent, terry towel manufacturers in Solapur, Maharashtra, a hub with more than 16,000 power looms and ₹200 crore in export turnover, saw orders revive rapidly. Units that had slowed production resumed shifts. Workers who feared layoffs spoke instead of renewed demand from American buyers.
In regions like Vidarbha and Nagpur, industry bodies welcomed the move as a turning point. Exporters of engineering goods, gems, and jewellery said the tariff reset restored competitiveness against rivals like China and Vietnam, while also reviving investor interest in local SMEs.
If tariffs marked the breakthrough, diplomacy will determine whether it endures.
The Architecture Behind the Announcement
Trade agreements do not implement themselves. That reality underpins much of Dr. Jaishankar’s Washington agenda.
His meetings with senior members of the U.S. administration are focused on building institutional follow-through with sectoral working groups, regulatory coordination, standards alignment, and monitoring mechanisms that can translate political commitments into operational outcomes. This is not about reopening negotiations, but about stabilising expectations. Predictability, especially for investors and manufacturers, matters as much as headline tariff cuts.
India has preserved protections for sensitive sectors such as rice, dairy, sugar, and soybeans, balancing openness with domestic political realities. The U.S., for its part, has secured expanded access to India’s consumer and industrial markets while advancing broader energy and strategic goals.
Minerals, Security, and the New Currency of Power
Critical minerals, often buried in technical jargon, sit at the heart of today’s geopolitical competition, and they loom large in Jaishankar’s Washington agenda.
The Critical Minerals Ministerial brings into focus a deeper convergence. Lithium, cobalt, and rare earths are no longer niche commodities. They sit at the core of defence manufacturing, renewable energy systems, electric mobility, and advanced electronics.
Rare earths are rare not in nature, but in trust. India and the United States share a growing concern about supply-chain concentration, particularly China’s dominance in processing and refining. Discussions at the ministerial are expected to explore joint exploration, processing capabilities, technology sharing, and coordination through multilateral frameworks such as the Quad.
This is where economics merges with national security, and commerce begins to shape geopolitics. Tariff relief improves market access, but mineral cooperation secures the inputs that make industrial growth sustainable. Together, they form the backbone of a longer-term strategic partnership.
How a Fractured Phase Turned Into a Reset
The backdrop to this agreement was fraught. In 2025, when the U.S. imposed tariffs of 50 per cent on Indian exports, partly tied to India’s continued purchase of Russian oil, exporters braced for prolonged disruption. Textile clusters slowed output. Engineering exporters warned of lost contracts. Yet dialogue never fully broke down.
Negotiations continued across multiple rounds. Prime Minister Narendra Modi and President Donald Trump stayed engaged through calls and diplomatic channels, keeping the process alive even amid pressure.
An unexpectedly influential role was played by U.S. Ambassador Sergio Gor. Shortly after assuming office, he leveraged his close access to President Trump to facilitate momentum with New Delhi. Within about a month of his arrival in India, talks accelerated noticeably, narrowing gaps that had lingered for months. The result was not a narrow compromise, but a strategic trade reset.
Markets Respond, Signals Travel
Following the announcement of the trade deal, markets reacted sharply. The Indian rupee recorded its strongest single-day gain in seven years, while the Nifty 50 climbed significantly, reflecting investor confidence that easing trade tensions would improve growth prospects.
Some analysts cautioned that key details remain subject to legal text and political approval. Still, the direction of travel was unmistakable. The ministerial meetings in Washington, therefore, signal that trade is becoming the gateway to strategic alignment.
For the U.S., deeper economic ties with India reinforce Indo-Pacific strategy and energy security objectives. For India, improved access to the U.S. market strengthens export competitiveness and supports integration into reconfigured global value chains shaped by the “China+1” shift. India-US ties are increasingly driven by the convergence of interests rather than alliance politics.
Strategy With Autonomy
Dr. Jaishankar’s engagements extend beyond trade and minerals into energy diversification, defence and nuclear cooperation, innovation partnerships, and regional strategic issues. The breadth of discussions reflects India’s preference for multi-domain engagement without formal alliance commitments.
Economic cooperation now routinely intersects with geopolitical calculation. Energy sourcing has diplomatic consequences. Supply chains influence strategic autonomy. Implementation will decide whether the deal becomes a bridge or a footnote.
Sector-specific tariff schedules, regulatory cooperation, and dispute-resolution mechanisms will determine whether momentum holds once political attention shifts elsewhere.
Choosing Direction in a Fragmenting World
Taken together, the India–US trade deal and Dr. S. Jaishankar’s visit represent two phases of a single strategic effort. One eases friction, and the other gives it institutional depth.
As global trade fragments and geopolitical competition sharpens, India and the United States appear to be moving away from episodic dispute management toward structured alignment without abandoning strategic autonomy. Deals may begin on paper. Partnerships endure through follow-through.