Trump, Modi Talk in Bid to Calm Tariffs, Russian Oil Dispute

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(Bloomberg) —

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US President Donald Trump said he spoke to Indian Prime Minister Narendra Modi in a move that offers to ease tensions between the two major economies amid a fight over tariffs and New Delhi’s purchases of Russian oil.

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Trump said he had a “wonderful” call with the Indian leader and wished him a happy birthday, in a social media post on Tuesday.

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“He is doing a tremendous job,” Trump added. “Narendra: Thank you for your support on ending the War between Russia and Ukraine!”

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The call comes as the two nations resumed trade negotiations this week, discussions both sides characterized as positive as they look to reset ties following Trump’s move last month to levy 50% tariffs on exports from the South Asian nation. The president had doubled the 25% import tax rate on Indian goods — aimed at countering the country’s tariffs and other trade barriers — to also punish New Delhi for its continued Russian energy buys.

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Modi in a post on X said that India supported Trump’s “initiatives towards a peaceful resolution of the Ukraine conflict.”

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Ukraine and its allies say purchases of Russian energy by India and China are undercutting global sanctions targeting Russian President Vladimir Putin that aim to pressure the Kremlin to end the war on its neighbor. Indian officials have defended the country’s energy purchases and insisted that they will continue to buy Russian oil as long as it is financially viable to do so.

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Indian equities traded higher on Wednesday and the rupee strengthened versus the dollar. Analysts sounded cautiously optimistic about India-US relations after the call.

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“This is typical carrot and stick approach” by Trump, said Amitendu Palit, senior research fellow and research lead on trade and economics at the Institute of South Asian Studies. “His officials remain critical of India but there is this understanding that let us not give up on the diplomatic route.”

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White House trade adviser Peter Navarro has been cranking up pressure on India to halt its purchases of Russian oil, and has even cast the conflict in Ukraine as “Modi’s war.”

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The US and India had previously committed to a bilateral agreement, which they intended to complete this fall, but those talks deadlocked and recent months have seen Trump toughen his stance against New Delhi as he looks to ramp up pressure over its Russia ties. New Delhi’s refusal to open dairy and agriculture markets are also among the reasons the talks have stalled.

Modi in his social media post added that India was “fully committed to taking the India-US Comprehensive and Global Partnership to new heights.”

It is unclear how the US and India will resolve their dispute over oil purchases. Trump in recent weeks has pressured other allies, including Group of Seven nations, to also ratchet up sanctions on both India and China, the biggest buyers of Russian energy.

Those additional sanctions threaten to complicate efforts to broker a trade deal with New Delhi and undo a delicate trade truce between Washington and Beijing.

“The call shows that there is clearly a thaw and the ice is melting but I would say we shouldn’t read too much into this,” said Biswajit Dhar, a professor at the Council for Social Development, a New Delhi-based research institute. “India has put all its cards on the table. It is up to America now to respond.”

–With assistance from Ravil Shirodkar and Michelle Jamrisko.

(Adds markets reaction and analysts’ comments.)

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