Over the past few months, relations between the United States and India have gone from stable and promising to tense and turbulent. Commentators in both countries are attributing this shift to a wide variety of explanations, ranging from reasonable to outright conspiratorial. Most explanations do not get to the heart of why the U.S.-India relationship under the second Trump term—which began on a constructive note with an early visit to Washington by Prime Minister Narendra Modi in February and an agreement to deepen trade, defense, energy, and technology cooperation—has taken a turn. The truth of the matter is that the sudden shift in U.S.-India relations is primarily due to significant disagreements over Pakistan and trade.
The downward slide in ties between Washington and New Delhi began with Operation Sindoor, which involved Indian strikes against terrorist camps in Pakistan, and Pakistan’s military response between May 7 and 10, 2025. Trump immediately took credit for brokering a ceasefire between India and Pakistan. Although Vice President J.D. Vance spoke to Modi and Secretary of State Marco Rubio communicated with Indian and Pakistani officials throughout the crisis, India has stated that the cessation of hostilities was requested by Pakistan as a consequence of India’s military actions. In a subsequent phone call with Trump on June 17, Modi informed the U.S. president (according to an Indian readout) that “India does not and will never accept mediation. There is complete political consensus in India on this matter.”
India’s sensitivities about third-party mediation attempts with Pakistan are not always appreciated in the United States. Since at least the Simla Agreement of 1972, New Delhi has insisted that differences between India and Pakistan must be resolved bilaterally. India’s experience has been that external mediation further encouraged and incentivized Pakistani revisionism. For example, British mediation in the Rann of Kutch crisis in April 1965 actively encouraged Pakistan’s decision to go to war in August that year. For this reason, India has long made strenuous efforts to resist third-party mediation, including in early 2009 by the incoming Obama administration in the United States. India’s continued resistance to U.S. mediation appears to be a source of Trump’s personal frustration given his desire to be a “peace-maker”, which has also animated his approach to the Russia-Ukraine, Israel-Iran, and Azerbaijan-Armenia conflicts.
Meanwhile, Pakistan has long sought third-party mediation, believing it would tilt outcomes in its favor, and has exploited this opportunity in at least three ways. One, it has played up the benefits of U.S. mediation, including through personal flattery. Two, the Pakistan Army under Asim Munir has reinforced its utility to the United States for counter-terrorism and Iran-related contingencies. And three, Pakistan appears to have promised the Trump administration and various U.S. political stakeholders economic opportunities from cryptocurrency deals to the exploitation of possible mineral and petroleum reserves, even though their feasibility is questionable. At the same time, Pakistan has made little effort to dilute its relationship with China, which remains a key provider of its advanced military equipment that was employed extensively by Pakistan during Operation Sindoor.
It is against this backdrop that the second area of difference emerged: U.S.-India trade talks failed to reach an outcome. India was early in initiating trade negotiations with the Trump administration, which preceded the ‘Liberation Day’ tariff announcements. Over more than five months, some 40 rounds of trade negotiations took place at various levels, with cabinet-level talks resulting in broad agreements on at least three occasions, including on July 2. The broad contours of a negotiated U.S.-India trade deal would have been far more sweeping in scope than anything the two countries had agreed to previously, including major tariff reductions in a variety of sectors. However, Trump opted not to accept the deals on offer. An announcement of a trade deal before August 1 could have helped return relations to a positive track but, instead, tariffs of 25% on what may be about 55% of Indian exports to the United States represent a major setback.
To be sure, India is less dependent on the export of goods—and the U.S. merchandise market—than some other major economies, such as Japan, South Korea, or Mexico. Exceptions, market diversion, and U.S. customers might also collectively offset some of the costs of tariffs. But there is no question that the absence of a trade agreement will have adverse consequences for Indian exporters, including for some sensitive sectors, at a moment when certain Indian industrial efforts are making steady progress. U.S. trade negotiators are still holding out for some deal with India, but the political appetite has now depreciated in both capitals. There are further challenges, including shortfalls in U.S. production in areas that might help offset the trade deficit and multiple negotiating parties on the U.S. side working at cross-purposes.
While Pakistan and trade are the two main points of divergence, differences concerning Russia have added yet another layer of complication to U.S.-India relations. Trump has become visibly frustrated by Russia’s apparent unwillingness to negotiate a ceasefire in Ukraine and has singled out India for its energy imports from Russia. To this end, he has issued an Executive Order that threatens a further 25% tariff on India for its import of Russian oil after August 27. India has responded by stating that its energy imports are “compelled by [the] global market situation” and a necessary measure to “safeguard its national interests and economic security,” comparable to the United States’ continued import of Russian uranium hexafluoride, palladium, fertilizers, and chemicals. Trump’s expected summit meeting in Alaska with Russian President Vladimir Putin may influence whether Trump continues to pursue such efforts.
The final factor at play is that part of the logic of U.S.-India relations was premised on a shared challenge posed by China’s military and economic policies. Trump’s apparent willingness to negotiate an economic agreement with China—signaled in the postponement of tariffs, the dilution of U.S. semiconductor export controls, and denial of visits to the United States of Taiwan’s leaders—has partly removed the logic of closer U.S-India strategic ties. If a grand bargain between the United States and China is in the cards, the logic of balance of power in the Indo-Pacific becomes less of a priority. While not an active contributor to the present state of U.S.-India relations, there may now be less of an incentive for Trump to want to rectify relations with India.
If not reversed, current disagreements could infect other aspects of U.S.-India relations including security cooperation, two-way investment, energy flows, technology partnerships, and people-to-people ties. The fact that both sides have (so far) resisted ad hominem attacks suggest room for some kind of resolution. This would most likely take the form of a trade and tariff agreement, subject to a decision by Washington not to impose further tariffs related to India’s import of Russian oil.
There was always the prospect of quick and fast turnarounds in U.S. foreign policy under Trump: that much was evident during his first term in relations with both adversaries (such as China, Russia, and North Korea) and allies (such as Japan, Canada, and Israel). While policy differences between the United States and India can—and have—been resolved in the past, what makes the present moment more difficult is the very personal nature of Trump’s attitude toward India and the sharp political sensitivities on India’s side—a real red line—concerning the prospect of any mediation by the United States between India and Pakistan.
Dhruva Jaishankar is Executive Director at ORF America.