India’s middle-power strategy won it a reprieve from Trump’s sky-high tariffs

After President Trump imposed 50% tariffs on India’s exports to the U.S., among the highest in the world last year, New Delhi powered ahead on trade deals with other economies, strengthening its hand in negotiations with the U.S.

On Monday, Trump said he was cutting tariffs on Indian products to 18%.

India’s strategy gives middle powers a potential playbook for resisting pressure from the U.S., and other major economies, on trade and security. As well as making deals with the U.K. and the European Union, and scheduling trade talks with Canada, India ignored insults from the White House and offered up extra concessions to bring the Washington back to the table.

“They course-corrected very quickly," said Ashok Malik, chair of the India practice at the Asia Group strategic advisory firm.

On the U.S. side, Trump dispatched his close aide Sergio Gor as ambassador to India in January, which some political experts saw as a chance to reset U.S.-India relations. Gor promised in his first public remarks in January that the trade deal was coming.

Back in July, New Delhi thought it was on the brink of a U.S. trade deal, but by the end of the month, the Trump administration said India hadn’t done enough to lower trade barriers and singled it out among purchasers of Russian oil. Trump accused India of indirectly funding Russia’s war machine and punished it with 25% tariffs on top of 25% reciprocal tariffs.

The levies, which took effect in August, contributed to broader uncertainty about the risks of investing in the South Asian nation, leading to billions of dollars of institutional investor funds flowing away from the country in 2025, and driving down the value of the rupee.

Although government spending and tax cuts to stimulate spending have helped support India’s economic growth in recent months, they didn’t offer a long-term solution.

“What spooked people was they couldn’t predict the floor of the relationship [with the U.S.] They were OK with a ceiling that was not high enough. But they wanted a floor," said Malik, a onetime policy adviser to India’s Foreign Ministry. “They’ve now got a floor and it’s a very decent floor."

India’s path to reaching an agreement with the U.S. involved quiet diplomacy while making a big deal of the agreements it signed elsewhere.

Indian Prime Minister Narendra Modi didn’t rise to comments from White House aides, who called Russia’s invasion of Ukraine “Modi’s war" and derided India as the “Kremlin’s laundromat" for buying Russian oil. That stoicism allowed Trump to say the two remained dear friends and keep lines of communication open.

India also offered significant concessions, including an overhaul of its nuclear liability laws and permitting private investment in nuclear energy—changes long sought by the U.S. On Sunday, New Delhi announced a tax break for AI data centers that promises to be a boon for U.S. tech giants.

But perhaps most significantly of all, India inspired a touch of FOMO at the White House by pursuing trade deals with competitors for the vast Indian consumer market.

Last week, India and the EU agreed to what they described as the “mother of all deals" in New Delhi, after Modi hosted the bloc’s leaders at the annual Republic Day military parade—an invite which often demonstrates New Delhi’s diplomatic priorities.

India offered major cuts to levies on European alcohol and said it would bring down tariffs on a significant quota of European cars to 10% over time, from as high as 110% now.

Also worrisome for the U.S. was a stunningly fast rapprochement between India and Canada.

In 2023, Canada alleged Indian authorities were linked to an extrajudicial killing on its territory, a charge India vehemently denied and which soured relations. Now the two countries are moving fast toward a trade deal. Canadian diplomats say that Ottawa has lots to offer India—for example, on energy and defense—the same things the U.S. wants to sell to India.

Another learning on India’s way to a trade deal: Don’t publicly disagree with Trump.

Political experts blamed much of the downturn in India-U. S. ties last spring on New Delhi’s contesting Trump’s claim that he brokered a cease-fire between India and Pakistan, after several days of military action in May.

But Modi has stayed quiet as Trump has asserted that India won’t buy any more Russian oil, allowing the U.S. president to frame the drop in tariffs against Indian goods as an American victory. New Delhi didn’t respond to requests for comment on whether India has agreed to curtail its purchases; the Kremlin said Monday it hadn’t received such a message.

Trying to replace Russian oil wholly with U.S. supplies would be difficult and expensive for Indian refineries, energy analysts say. But the fact that India has made significant reductions—and is seen to continue to do so—might be sufficient to satisfy the White House, trade experts say.

More widely though, analysts are skeptical that India can buy hundreds of billion dollars worth of energy, agricultural products and other goods from the U.S.—as Trump announced on Monday—unless it is given a decade or more to reach that goal.

India buys about $45 billion worth of U.S. goods at present.

It is too early to celebrate, said Ajay Srivastava, founder of GTRI, a trade research firm. In several cases, countries that arrived at trade deals with the U.S. later repented because their deals were too one-sided, he said.

Trump’s Truth Social post outlining the agreement “raises more questions than it answers," said Srivastava. Legally binding texts, running into thousands of pages, are what matters, he added.

Trump has also been known to pull out of deals. For instance, he vowed to resurrect tariffs on South Korea last month despite a deal between Seoul and Washington made in the fall.

Still, even though the fine print is awaited, the deal announced Monday is an important signal that the India-U. S. relationship is on a better footing, offering hope to other countries that there are ways to persuade the Trump administration to reverse course.

Write to Tripti Lahiri at tripti.lahiri@wsj.com