The trade that binds the Indian and US economies

Lost in the tumult over tariffs between the United States and India is the value that both countries derive from the services part of their total trade, writes Alex Travelli from New Delhi

- Alex Travelli

The economic relationship between the United States and India has been driven perilously close to a rupture in the past month. President Donald Trump is ready to impose 50% tariffs on Indian goods, starting next week. Those tariffs in turn threaten to wipe out businesses that depend on the export of Indian electronics, gems, seafood, carpets and more.

Lost in the tumult is the value that both the United States and India derive from the services part of their total trade, which topped $200 billion last year.

Trump has focused on the $46 billion deficit in goods that the United States ran with Indian companies in 2024. But over the same period, Indian and American companies bought and sold, in virtually equal amounts, $84 billion worth of services. The two countries have run a nearly equal balance in the exchange of services for several years.

A big reason is that two-thirds of Fortune 500 firms, from Meta and Microsoft to Walmart and Lowe's, now rely on offshore operations across India.

In India’s biggest cities, multinational companies with American headquarters are building permanent corporate offices to do work across the world. Their annual payroll is far greater than the US trade deficit Trump is concerned about. That is money that helps drive India’s economy and benefits companies with deep roots in the United States.