The facts — and frictions — of the U.S.-India trade deal

This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse. Subscribe here.

The big story

“It’s easier said than done,” is a phrase I have now heard several times from different experts as we discussed the feasibility of the terms of the U.S.-India trade deal.

Less than a week after the India-EU trade pact was finalized, U.S. President Donald Trump on Monday announced in a post on Truth Social that he had agreed a deal with Indian Prime Minister Narendra Modi, calling him a “great friend.”

Trump said Washington would cut tariffs on Indian goods to 18% from 50%, while New Delhi will lower duties on U.S. goods to zero, replace Russian oil with supply from U.S. and Venezuela, open sensitive markets such as agriculture and buy $500 billion worth of American goods.

Modi, in his response on X, expressed delight over the lowering of tariff of 18%, thanked Trump and extended support for his “efforts for [global] peace.”

Despite the outpourings of warm sentiment on both sides, the deal risks being derailed. What was said by the two leaders — and what was left unsaid — is already leading to confusion.

“US President Trump’s claims that India will slash duties to zero, stop importing Russian oil, and raise US imports to US $500 bn have not yet been confirmed by the Indian authorities,” said Alexandra Hermann, lead economist at Oxford Economics.

“They look unrealistic to us, which in turn raises risks of US backtracking,” she added.

That would not be the first time Trump reverses a trade deal.

Last month, Trump raised tariffs on South Korean imports back to 25% from 15%, pointing to a delay in the South Korean legislature approving the agreed trade deal.

Nomura in a report on Tuesday said that India’s trade deal with the U.S. is a significant breakthrough, but “no deal is certain,” citing Trump’s renewed threat to raise tariffs on South Korea.

Disputed sector

India’s first official deviation from the terms of trade proposed by Trump came on Tuesday as New Delhi’s Commerce and Industry Minister Piyush Goyal said the deal will protect “the interest of our agriculture and our dairy sectors in full respect.”

His counterparts in Washington, however, are doubling down on Trump’s claim that India will remove non-tariff barriers to its agricultural market for the U.S. and remove tariffs on a majority of farm imports.

On Wednesday, U.S. Trade Representative Jamieson Greer said India will cut tariffs to zero on a “vast” set of agricultural goods, adding that there will be some protection around few certain key areas.

“For a variety of things like tree nuts, wine, spirits, fruits, vegetables, tariffs will go down to zero,” Greer told CNBC’s Squawk Box. “It is a big win.”

The domestic farm sector is important for both the U.S. and Indian administrations.

In December last year, the Trump administration doled out a $12 billion aid package to support farmers, who are…