US Commerce Secretary Howard Lutnick has intensified pressure on India over agricultural trade imbalances, threatening to block New Delhi’s access to American markets unless India begins purchasing US corn, marking a significant escalation in bilateral US India trade tensions that have already reached crisis levels with 50% tariffs imposed on Indian goods.
Key Highlights
- US demands India leverage its 1.4 billion population to purchase American corn despite current zero imports
- Trade deficit between US-India reached $45.8 billion in 2024, fueling Washington’s aggressive stance
- Agricultural trade remains central sticking point with India imposing 39% average tariffs versus US’s 5%
US India Trade Tensions: Growing Trade Imbalance Fuels Diplomatic Crisis
The United States maintains a substantial trade deficit with India that has grown consistently over recent years, creating the foundation for current US India trade tensions. According to official US Census Bureau data, America’s goods trade deficit with India reached $45.8 billion in 2024, representing a 5.9% increase from the previous year. The imbalance has persisted through 2025, with the deficit reaching $40.0 billion in just the first seven months of the year.
- US exports to India totaled $41.5 billion in 2024, while imports reached $87.3 billion
- The deficit has grown from $43.2 billion in 2023 to current levels
- Agricultural products represent a key component of the US India trade tensions dispute
This expanding deficit has become a central justification for the Trump administration’s increasingly aggressive trade posture toward India. The Commerce Secretary’s latest statements reflect frustration with what Washington perceives as India’s unwillingness to reciprocate market access despite benefiting significantly from US consumer markets.
U.S. Commerce Secretary @howardlutnick complains about India not buying U.S. corn as if he knows nothing about free markets, choice, freedom etc. People buy what they like at a price that suits them. Forcing people to ‘buy’ specific things used to be a socialist thing! pic.twitter.com/WizoNmcULn
— Husain Haqqani (@husainhaqqani) September 14, 2025
Agricultural Trade Becomes Central Battleground
The corn import dispute highlights broader disagreements over agricultural market access between the two nations, further intensifying US India trade tensions. Current data shows US corn exports to India were merely $2.16 million in 2024, representing virtually zero trade in a commodity where America is the world’s leading producer. This minimal figure stands in stark contrast to US corn exports totaling $14.34 billion globally in 2024.
India’s agricultural tariff structure creates significant barriers for US exporters, contributing to ongoing US India trade tensions. The country imposes an average tariff of 39% on imported agricultural products compared to 5% levied by the United States, with some Indian tariffs reaching as high as 50%. These protective measures aim to shield millions of Indian farmers from international competition, but have become a major source of friction with Washington.
- India exported 2.28 million metric tons of corn in 2023 while importing only 0.180 million metric tons
- US agricultural exports face tariffs ranging from 15-68% across different categories
- The agricultural trade dispute extends beyond corn to include soybeans, wheat, and dairy products
The Commerce Secretary’s pointed criticism reflects America’s broader strategy of demanding reciprocal market access in these escalating US India trade tensions. “India brags that they have 1.4 billion people. Why won’t 1.4 billion people buy one bushel of US corn?” Lutnick stated during a weekend television interview.
Tariff Escalation Reaches Historic Levels
The Trump administration has implemented one of the most severe tariff regimes against India in modern trade history, with rates reaching 50% on Indian exports, representing a new peak in US India trade tensions. This escalation began with 25% reciprocal tariffs imposed in July 2025, which doubled to 50% by August 27 following additional penalties for India’s continued purchases of Russian oil.
The tariff structure affects approximately $48.2 billion worth of Indian merchandise exports to the United States, representing nearly the entire scope of bilateral trade in goods. These rates place India among the highest-tariffed US trading partners globally, exceeding measures imposed on most other nations including China during previous trade conflicts.
- Initial 25% tariffs took effect August 7, 2025
- Additional 25% penalty imposed August 27 for Russian oil purchases
- Total impact covers $48.2 billion in Indian exports
- Rates among highest imposed on any US trading partner
President Trump has acknowledged the severity of these measures, stating that imposing 50% tariffs on India “caused a rift” between the two countries while describing the decision as “a big deal” that was “not an easy thing to do.” The administration’s willingness to strain relations with a strategic partner reflects the priority placed on addressing these US India trade tensions.
India Maintains Defensive Position Amid Pressure
India has consistently rejected US characterizations of its trade policies as unfair, describing American tariff actions as “unfair, unjustified and unreasonable” in response to mounting US India trade tensions. New Delhi’s position centers on protecting domestic agricultural interests and maintaining energy security through diversified procurement policies, including continued purchases of Russian crude oil despite Western sanctions.
The Indian government has emphasized that its energy procurement decisions are driven by national interest and market dynamics rather than geopolitical considerations. This stance has drawn particular criticism from Washington, which views India’s Russian oil purchases as undermining efforts to isolate Moscow economically following its invasion of Ukraine.
- India maintains energy procurement based on national interest
- Government protecting millions of small-scale farmers from foreign competition
- Historical exclusion of agriculture from free trade agreements continues
- Bilateral trade negotiations remain stalled over agricultural market access
Commerce Minister Jitin Prasad informed Parliament that India remains committed to protecting farmers, workers, and exporters while implementing strategies to mitigate tariff impacts through trade diversification. The government has avoided making concessions on agricultural market opening, viewing such moves as potentially devastating to rural livelihoods.
Final Assessment: Trade War Intensification Signals Broader Realignment
The escalating trade conflict between Washington and New Delhi represents more than agricultural disputes or energy procurement disagreements. Lutnick’s ultimatum over corn purchases signals a fundamental shift in US-India economic relations, where America’s traditional strategic patience has given way to transactional demands for immediate commercial reciprocity, marking a new chapter in US India trade tensions.
The 50% tariff regime now governing bilateral trade creates unprecedented uncertainty for businesses and investors in both countries. With negotiations showing little progress and both sides maintaining entrenched positions on core issues, the current trajectory suggests further deterioration rather than resolution. India’s August trade data already shows exports to the US declining from $8.01 billion in July to $6.86 billion following tariff implementation.
The Commerce Secretary’s threat to deny market access unless India purchases American agricultural products establishes a precedent that could reshape trade relationships globally. As Lutnick warned, nations must “either accept it or have a tough time doing business with the world’s greatest consumer.” This approach prioritizes immediate commercial gains over long-term strategic partnerships, marking a significant departure from previous diplomatic norms and potentially setting the stage for prolonged US India trade tensions.
