Did a Missed Phone Call Derail a Mega Trade Deal? US Claim Sparks Fresh India–US Tensions
Fresh uncertainty has crept into India–US trade relations after a striking claim by Washington raised questions over diplomacy, tariffs, and future market access. According to the US Commerce Secretary, a long-negotiated trade deal with India collapsed because Prime Minister Narendra Modi did not personally call US President Donald Trump, a statement that has added a new geopolitical angle to an already fragile trade environment.
The comments have unsettled investors, exporters, and policymakers, as markets assess whether political optics could once again dictate economic outcomes.
US Commerce Secretary’s Claim Reopens Trade Deal Debate
US Commerce Secretary Howard Lutnick said in a recent podcast that the India–US trade deal failed to materialise due to the absence of direct leader-level engagement.
“I set the deal up. But you had to have Modi call President Trump. They were uncomfortable with it. So, Modi didn’t call,” Lutnick said.
Speaking on the All-In Podcast, Lutnick suggested that Washington had assumed the India deal would close first, even before agreements with Indonesia, the Philippines, and Vietnam. When that assumption failed, the US moved ahead with other countries, changing the tariff dynamics.
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‘The Train Has Left the Station’: US Steps Back
Lutnick made it clear that the earlier terms are no longer available.
“The US has stepped back from that trade deal that we had agreed to earlier. We are not thinking about it anymore,” he said, adding,
“Are you ready for the train that left the station three weeks ago?”
According to him, deals with Southeast Asian nations were concluded at higher tariff rates, complicating India’s position when talks resumed later.
Tariffs, Russian Oil, and a Sharper US Stance
The trade talks had already suffered a major blow last year when Donald Trump doubled tariffs on Indian goods to 50 percent—the highest imposed on any country. This included a retaliatory levy linked to India’s continued purchases of Russian oil.
The situation intensified further after Trump approved a bipartisan Russia Sanctions Bill, which threatens sweeping penalties on countries trading with Moscow.
Key provisions of the bill include:
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A proposed 500 percent tariff on goods from countries buying Russian oil or uranium
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Expanded presidential powers to pressure major economies
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Explicit mention of India, China, and Brazil as leverage points
The bill would give the President “tremendous leverage against countries like China, India and Brazil,” Lutnick said.
Here’s What Happened Today and Why Traders Reacted
Markets reacted cautiously to these developments, with export-oriented stocks coming under mild pressure. Traders were wary of escalating rhetoric at a time when clarity on tariffs remains elusive.
Key market reactions observed today:
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Select IT and textile exporters saw profit booking
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FMCG and domestic-focused stocks remained resilient
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Derivative traders priced in higher geopolitical risk premiums
A market strategist noted, “This isn’t just about a trade deal. It’s about policy unpredictability. Markets dislike surprises, especially political ones.”
Impact on Traders and Investor Portfolios
For short-term traders, the renewed uncertainty has increased volatility risks, particularly in stocks with high US revenue exposure. Export-heavy sectors such as IT services, auto components, chemicals, and textiles could remain sensitive to headlines.
For long-term investors, the impact is more nuanced:
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Near-term earnings visibility for exporters may weaken
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Currency volatility could rise if tariff threats escalate
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Domestic consumption themes may continue to outperform
Portfolio advisors suggest maintaining diversification and avoiding aggressive bets purely based on trade deal expectations.
India’s Position and the Road Ahead
The Indian government has not officially responded to Lutnick’s remarks. However, officials have consistently maintained that negotiations are ongoing and focused on fair market access without compromising farmer and MSME interests.
Commerce Secretary Rajesh Agrawal had earlier said India hopes to conclude talks “sooner than later.” Six rounds of negotiations have already taken place, with US Deputy Trade Representative Rick Switzer recently visiting New Delhi.
Despite tariff pressures, trade data shows resilience. India’s exports to the US rose over 22 percent in November, while exports during April–November grew more than 11 percent year-on-year. The US remains India’s largest trading partner, accounting for roughly 18 percent of total exports.
Markets Brace for More Political Signals
With a US Supreme Court ruling on the legality of Trump-era tariffs still awaited—and potential refunds of nearly $150 billion at stake—global markets remain on edge. Any adverse ruling or fresh tariff escalation could quickly ripple through emerging market assets.
For now, investors are watching three key triggers:
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Official responses from New Delhi and Washington
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Developments around US tariff legality
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Signals on whether trade talks can be revived on new terms
The missed phone call may be symbolic, but its market implications are very real.
