Optimal strategy to get best trade deal with the US is to wear down the opening position, not the relationship: SBI

India should keep the conversation warm, avoid public escalation, make limited and reversible offers, and wait for the US Administration’s first demand to run into US market costs, China-balancing needs and alliance fatigue, says SBI economists

| Photo Credit:

th-online Administrator

India’s optimal strategy to get the best trade deal with the US is to wear down the opening position, not the relationship, say State Bank of India (SBI) economists.In a report, the economists noted that India sits between NATO allies and China -- it does not have China’s concentrated chokehold, but it has meaningful leverage: market scale, technology talent, pharmaceuticals, defence procurement, energy optionality, diaspora influence and Indo-Pacific value.They suggested that India should keep the conversation warm, avoid public escalation, make limited and reversible offers, and wait for the US Administration’s first demand to run into US market costs, China-balancing needs and alliance fatigue. Then bargain late, when Washington’s reservation price is clearer and India’s value as a market, technology partner, defence buyer and Indo-Pacific counterweight is more visible.“India’s strategy should be to test the resolve of the US Administration and potentially accept a high cost follow-through in the short run, and signal that India stands its ground for the long game…. Dive sideways and test the resolve…..India will win...,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.The SBI report noted that the US Administration is using uncertainty as a bargaining instrument across NATO, Iran, tariffs, Greenland, China and also India.“In game theory terms, the US Administration is preserving incomplete information about the “type” of bargaining. In this context, the other side must decide whether to concede, wait, test, or counter-escalate. The short-run payoff is leverage. The long-run cost is trust depreciation with the US. Interestingly, such repeated uncertainties also teaches allies, rivals and markets to discount future signals,” the economists said.Alternatively, if every partner learns that the final US position will be adjusted when costs rise, the bargaining value of the signal declines.The economists observed that China sits at the top of the architecture because it has credible counter-leverage: critical minerals, rare-earth magnets, manufacturing depth, export controls and supply-chain pressure. So, the US administration must calibrate differently with China because Beijing can impose real costs.Meanwhile, the uncertainty still persists even after an MoU was signed between the USA and Iran to end the war on 17 June, the economists said. Shipping data through the Strait of Hormuz shows only limited and uneven signs of restarting. There has only been a gradual return of flows, rather than a broad normalisation of traffic.The economists said while crude flows have restarted in a limited way, agricultural inbound shipments show only a tentative and incomplete recovery, but LNG and fertilizer-related shipments remain effectively absent.Published on July 10, 2026