Modi brings a tariff ‘gift’ to Trump talks

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WASHINGTON (Reuters) -Indian Prime Minister Narendra Modi will come bearing gifts when he meets Donald Trump on Thursday, hoping concessions on tariffs, fresh business deals and the prospect of cooperation on China will win the U.S. president’s favor.

Trump, not yet one month into his presidency, has wielded the threat of tariffs against friend and foe alike to try to extract new trade deals, investment or law enforcement help.

India may not be an exception: Although Trump had a warm relationship with Modi in his first term, he has called India a “very big abuser” on trade and his levies on steel and aluminum hit India particularly hard.

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Ahead of his White House meeting on Thursday, Modi has readied promises including increased liquefied natural gas, combat vehicle and jet engine purchases, according to Indian government officials who declined to be named.

Indian officials are also looking at possible deals on U.S. agriculture exports to India and investment in nuclear energy, along with tariff cuts in at least a dozen sectors, including electronics, medical and surgical equipment, and chemicals.

Those are areas Trump’s team believes India needs to make improvements, according to another person familiar with their thinking.

It’s a “gift” for Trump, said one of the sources, who declined to be named as they previewed a private meeting.

U.S. and Indian officials were also moving forward with talks on a bilateral trade deal, with a Trump administration official saying they hoped to have a deal in place this year.

“We envision a stronger defense partnership, that’s procurement and moving forward on things like defense exercises,” said a senior Trump administration official.

“On energy, we have the ability to literally power the Indian economy with U.S. energy sales, and the president believes both of those things can bring down the trade deficit.”

The case of billionaire Gautam Adani may come up in the talks after his indictment by the U.S. Justice Department in November over an alleged bribery scheme. Adani hails from Modi’s western state of Gujarat and his Adani Group runs several key infrastructure projects across the globe.

Opponents and critics often allege the meteoric rise of Adani’s ports-to-energy empire was partly due to his close relations with, and favorable treatment by, administrations run by Modi’s BJP and its allies. The duo have repeatedly denied impropriety.

Another thorny issue will be in the background: the alleged Indian intelligence plot to assassinate a Sikh activist in the United States during the administration of Trump’s predecessor, Joe Biden. The U.S. official who briefed reporters said Trump prioritizes the safety of every American.

This time, the tariff issue will be front and center, said Richard Rossow, head of the India program at the Center for Strategic and International Studies, a Washington think tank.

“It’s going to be a boxing match,” he said. “I think India is willing to take a few hits, but there’s a limit.”

The U.S. has a $45.6 billion trade deficit with India. Overall, the U.S. trade-weighted average tariff rate has been about 2.2%, according to World Trade Organization data, compared with India’s 12%.

Trump’s administration has vowed reciprocal tariffs on every country that charges duties on U.S. imports, a move that will ratchet up fears of a widening global trade war.

WHAT TRUMP WANTS

Trump wants more assistance from India on unauthorized immigration. The country is a major source of immigrants to the United States, including a large number in the tech industry on work visas and others in the U.S. illegally.

Modi was due to meet one-on-one with Elon Musk on Thursday and Musk was seen walking to Blair House, which is opposite the White House and where Modi is staying, shortly before the scheduled time for that meeting. Musk is a key Trump ally and his Starlink company’s bid to enter the South Asian market could come up for discussion.

Modi held a bilateral meeting on Wednesday with Tulsi Gabbard, Trump’s newly installed director of national intelligence, and they discussed enhancing intelligence cooperation, particularly in counter-terrorism, cybersecurity, emerging threats, and strategic intelligence sharing.

India may prove critical to Trump’s strategy to thwart China, which many in his administration see as the top U.S. rival. India is wary of neighboring China’s military buildup and competes for many of the same markets. Modi also worries that Trump could cut a deal with China that excludes India, according to Mukesh Aghi, president of the U.S.-India Strategic Partnership Forum lobbying group.

“Even though much of the talk will be on the bilateral relationship, on trade, on immigration, defense purchases, the China thread will weave through the meeting,” said Lisa Curtis, an India-focused former White House official during the first Trump administration now with the Center for a New American Security think tank.

Still, India tries to avoid direct confrontation with Beijing and maintains a foreign policy of “strategic ambiguity” to avoid picking sides in major international conflicts.

That approach has also meant that India has continued its ties with Moscow as it carries out its war with Ukraine. India has remained a major consumer of Russian energy, for instance, while the West has worked to cut its own consumption since the war started.

Trump spoke on Wednesday with both Russian President Vladimir Putin and Ukraine’s Volodymyr Zelenskiy about starting negotiations to end the war in Ukraine.

“The president, I think, will welcome a conversation with respected world leaders, including Prime Minister Modi, about how we can constructively move towards peace in Europe,” said the Trump administration official.

(Reporting by Trevor Hunnicutt and David Brunnstrom in Washington, Manoj Kumar, Aditya Kalra and Aditi Shah in New Delhi, and Shivam Patel in Bengaluru; Editing by Don Durfee, Alistair Bell and Hugh Lawson)

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