Proposed India-US Trade Deal Faces Farmer Protests Amid Trump's Pressure on Trade, Russia and China

Indian leader faces ‘perfect storm’ at home as proposed US trade deal sparks backlash and Trump ramps up pressure over Russian oil and China

· Growing Domestic Opposition: Prime Minister Narendra Modi is facing increasing political pressure over a proposed India-US trade agreement, particularly from farmers concerned about greater market access for American agricultural products.

· Punjab Farmers Protest: Thousands of farmers from Punjab marched towards Delhi, alleging the government is negotiating a "secret" trade deal that could permit increased imports of U.S. soybean oil, feed grains and dairy products, threatening Indian farmers' livelihoods.

· Police Action: Authorities blocked highways leading to Delhi to prevent protesters from reaching the national capital.

· US Seeks Alternative Markets: Washington is pushing India to import more U.S. agricultural products as China has sharply reduced purchases of American soybeans during the ongoing U.S.-China trade conflict.

· Political Challenge for Modi: The controversy highlights the difficulty of balancing:

o domestic political interests,

o stronger strategic ties with the United States,

o relations with China, and

o India's energy dependence on Russian oil.

· Analyst's View: Council on Foreign Relations fellow Sadanand Dhume described the situation as a "perfect storm" of geopolitical tensions and domestic unrest, arguing that perceived U.S. pressure has narrowed Modi's political space.

· Changing U.S. Priorities: According to Dhume, the Trump administration's softer approach towards China has reduced India's strategic importance in Washington, allowing the U.S. to negotiate from a stronger position.

· Broader U.S. Demands: Besides agricultural market access, Washington is pressing India to:

o reduce purchases of Russian energy,

o diversify supply chains away from China,

o deepen strategic cooperation with the U.S. and its allies.

· Trade Deal Still Pending: Despite negotiations since February last year, India and the U.S. have not finalized a bilateral trade agreement.

· Reasons for Delay: India has hesitated because:

o the U.S. initiated fresh trade investigations,

o American lawmakers proposed tariffs of up to 100% on countries purchasing Russian energy,

o uncertainty followed the U.S. Supreme Court's ruling that Trump's global tariffs were illegal.

· Interim Trade Deal: U.S. Secretary of State Marco Rubio stated after meeting External Affairs Minister S. Jaishankar in Manila that an interim trade agreement is "almost complete."

· Quad Meeting: The meeting occurred ahead of the Quad Foreign Ministers' meeting involving India, the U.S., Japan and Australia, where Indo-Pacific security and Middle East developments were also discussed.

· Energy Security Concerns: Rising energy prices following U.S. military actions against Iran have complicated India's energy security and affected projects such as Chabahar Port, viewed as strategically important for access to Central Asia and balancing China's regional influence.

· Strategic Balancing: While India continues presenting itself as a key U.S. partner in countering China, President Trump is also preparing to host Chinese President Xi Jinping, raising questions about Washington's long-term strategic priorities.

· Strategic Autonomy Under Pressure: Analysts argue India's traditional policy of strategic autonomy is increasingly being tested by simultaneous pressure on trade, energy and geopolitical alignment.

· Agriculture Remains Sensitive: Experts note that India maintains significantly higher tariffs on U.S. agricultural products and restricts imports of genetically modified crops to protect millions of farmers who depend on agriculture for their livelihoods.

· Potential Policy Reassessment: Some analysts believe that if U.S. pressure over Russian oil imports and trade intensifies alongside domestic farmer protests, New Delhi may reassess aspects of its strategic relationship with Washington, although no such shift has yet occurred.

[ABS News Service/23.07.2026]

Indian Prime Minister Narendra Modi is facing mounting domestic backlash over a potential trade deal with the United States that would place India at the centre of US President Donald Trump’s efforts to redirect agricultural exports displaced by the US-China trade conflict, raising fresh questions about New Delhi’s broader strategic alignment with Washington against Beijing.

Thousands of farmers from the northern state of Punjab marched towards Delhi on Tuesday to oppose what they described as a “secret” trade deal with Washington.

They accused the government of negotiating concessions that could open India’s markets to cheaper American imports, including soybean oil, feed grains and dairy products, threatening the livelihoods of millions of farmers. Authorities blocked major highways to prevent demonstrators from reaching the capital.

The protests highlight the domestic political risks for Modi as his government deepens ties with Washington while facing pressure from Trump over trade, Russian oil purchases and efforts to reduce US dependence on China.

Washington has been seeking alternative buyers for American agricultural exports after China sharply reduced purchases of US soybeans in response to Trump’s tariffs. India has emerged as a key target for greater market access, but the backlash underscores the challenges facing Delhi as it attempts to balance its economic interests with both the US and China.

According to Sadanand Dhume, a senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations, Modi is facing a “perfect storm of geopolitical turmoil and domestic political unrest”.

“He has faced challenges before, but the current crisis may be his severest challenge yet,” Dhume said, adding that Washington had “ended up narrowing the political space in India” and that the Indian public resented “what it sees as unreasonable American bullying”.

Dhume noted that the Trump administration’s “apparent decision to dial down its actions against China has had the unintended consequence of reducing India’s salience” in Washington.

“This gives the US more room to push for a trade deal on its own terms with India,” he said.

Beyond agricultural demands, Trump is using tariffs as leverage against countries that continue to buy Russian energy, while pressing India to help the US and its allies remove China from critical supply chains.

However, a trade deal between India and the US remains elusive, despite negotiations since February last year, just weeks after Trump returned to the White House.

According to sources, Delhi has held back as Washington has launched fresh trade investigations and lawmakers introduced a bill proposing tariffs of up to 100 per cent on countries that buy Russian energy. The proposal, introduced in the US Senate last week, has been framed by colleagues as the “final wish” of Lindsey Graham, the late South Carolina senator and friend of Trump.

Earlier this year, Washington and Delhi announced a trade framework after the Trump administration removed 25 per cent tariffs on Indian imports linked to purchases of Russian oil. According to sources, Delhi refused to finalise it after the US Supreme Court declared in February that Trump’s global tariffs were illegal. Since then several rounds of talks have failed to deliver another breakthrough.

On Tuesday, US Secretary of State Marco Rubio met with Indian External Affairs Minister Subrahmanyam Jaishankar in Manila, the Philippines, ahead of a Quad foreign ministerial meeting.

Rubio said the two sides agreed on the importance of finalising the “interim trade deal”, which was “almost complete”. The Quad is a US-led bloc linking India, Japan and Australia to counter China’s influence in the Indo-Pacific region.

The two diplomats also discussed developments in the Middle East, according to Rubio.

In addition to trade pressures, Trump’s actions have raised energy prices and harmed India’s plans to counter China in its backyard, with US forces striking critical sites in Iran. These include Chabahar Port, a project long viewed by Delhi as essential to securing access to Central Asia and balancing Beijing’s expanding influence on regional trade routes.

Indian diplomats continue to pitch their country as vital to Washington’s strategy for countering Beijing, even as Trump prepares to host Chinese President Xi Jinping at the White House in September.

Trump has ruled out taking action against Beijing, despite delivering a nationally televised address last week accusing China of interference in US elections and of trying to “make him look bad”.

At the same time, India’s strategic autonomy is coming under strain as Indian farmers find themselves caught in the fallout from Trump’s trade strategy, with Washington seeking new export markets to offset the damage US farmers have suffered from tariffs on China ahead of crucial midterm elections.

Sourabh Gupta of the Institute for China-America Studies, a Washington-based think tank, said that despite speaking the “language” of strategic autonomy, Modi’s government had “forsaken” it for strategic alignment with the US and the West.

While Delhi had offered trade concessions to Washington, those concessions were premised on a “stable and comparably favourable tariff rate”, he said, adding that proposed tariffs targeting countries that buy Russian energy would undermine that premise.

Despite India’s vast young population, the country “creates too few industrial sector jobs and hence needs a protected agriculture sector as a fallback for livelihood-linked reasons”, Gupta said.

He noted that India’s tariffs on US agricultural products were roughly six times higher than Washington’s, while Delhi also restricted imports of genetically modified products, including American soybean and corn.

Although China runs the largest goods trade surplus with the United States, Gupta said Trump had long sought to reduce or eliminate US trade deficits with all trading partners. As a result, he added, Indian farmers were “fated to be on the potential market-access firing line” once Trump imposed sweeping tariffs on countries around the world.

The question now is whether mounting pressure over trade, energy and domestic politics could force a broader reassessment of Delhi’s relationship with Washington – a possibility analysts said could not be ruled out.

Kunal Singh, of the Belfer Centre for Science and International Affairs at Harvard Kennedy School, said that Modi had so far been “very conciliatory towards” the Trump administration.

Singh stressed he was not making a prediction, but noted that if the pressure over Russian oil purchases and the threat of extraordinary tariffs were applied as domestic protests grew, “then Modi might begin to reconsider his government’s overall foreign policy vis-a-vis the US”.