India now trades more with China than with the United States, and energy is the reason Washington is losing leverage. That shift has hardened disagreements over tariffs and supplies, complicating US efforts to bind India closer to Washington and the Quad. US Secretary of State Marco Rubio spent four days in India in late May 2026 trying to steady ties and push both capitals toward a broader trade deal, officials say. Indian exports to the United States fell in the May-September 2025 period, and officials say energy, with Russian crude undercutting some US offers amid the Iran war, is the decisive lever shaping New Delhi's choices.

Four days in late May gave Marco Rubio his opening to press for a reset, and optics mattered as much as policy. The visit was explicitly pitched as an attempt to calm months of friction that centred on tariffs, market access and competing approaches to China, energy and defence coordination.

Where the disagreement sits

The core dispute is narrow and stubbornly concrete: reciprocal tariffs. Analysts at the Lowy Institute note that a punitive tariff regime introduced under the previous US administration pushed duties sharply higher. Negotiators reportedly discussed an in-principle reduction, but that compromise never crystalised into a final pact.

That arithmetic has consequences on trade flows. Lowy Institute figures cited a sharp decline in Indian exports to the United States in the May to September 2025 window. The drop has fed a wider perception in New Delhi that the relationship with Washington has lost momentum, even as defence cooperation and shared strategic concerns about China remain important.

Indian and US officials told Al Jazeera they're moving toward a broader trade agreement, but the two sides differ on the sequencing and substance. New Delhi wants market access and tariff relief that protect domestic producers. Washington wants enforceable commitments that open Indian markets to American goods and services. That gap has proved politically sensitive on both sides.

Energy as the decisive lever

Energy policy is now the pivot. Al Jazeera reported that the Iran war and the resulting global supply shock have forced New Delhi to prioritise cheaper Russian crude and other alternative suppliers.

Mastheads

For many Indian importers, Russian oil remains materially cheaper than US offers, blunting immediate commercial appeal for expanded US energy sales.

The result is a strategic awkwardness. Washington wants India to tilt away from Moscow and Beijing; New Delhi faces an acute short-term choice between cheaper energy and long-term alignment. But that balance gives China and Russia continued leverage in New Delhi's trade and energy decisions, complicating US plans to bring India closer into a shared economic and strategic orbit.

Officials framed Rubio's trip as part of a steadier push to shore up Quad unity and maintain defence cooperation even while commercial talks drag on. India's external affairs minister S. Jaishankar emphasised the wider stakes, telling interlocutors that the partnership impacts and influences other regions. That line underlines why both sides see an economic fix as politically useful, not just commercially desirable.

Observers said much of the visit was about optics. The mission aimed to reassure New Delhi that Washington remained committed to trade, defence and Quad coordination after a period when some in India felt the current US administration had not been sufficiently invested.

There are procedural and political obstacles on both sides. Trade negotiators in New Delhi have signalled breakthroughs in the past that failed to materialise, a pattern Lowy Institute analysts flagged. In Washington, domestic politics make any deal that looks like special treatment delicate to sell. The lack of a published timetable only deepens uncertainty.

Still, both capitals describe talks as ongoing. Indian and US officials say they're moving toward a broader agreement, even if no final timetable or binding deal has been announced. That ambiguity reflects the scale of what remains unresolved: tariffs, market access, and the near-term energy calculus shaped by the Iran conflict.

For now the substantive headline is simple. India's trade with China has overtaken its trade with the United States, and energy prices and supply choices driven by the Iran war are a central constraint on New Delhi's willingness to pivot away from cheaper Russian oil. Those two facts narrow Washington's options and sharpen New Delhi's bargaining position at the negotiating table.

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The mid-2025 fall in exports is the clearest economic pressure point. Watch whether negotiators agree tariff sequencing and whether India shifts suppliers as the Iran war reshapes energy markets, because those outcomes will decide Quad cohesion.

This article was created with AI assistance.