WASHINGTON (Diya TV) — The year 2025 has tested United States-India relations, marked by trade tensions and renewed U.S. engagement with Pakistan. Yet, despite challenges, both countries have made quiet but significant progress in defense, technology, and energy cooperation, experts say.

Dhruva Jaishankar, executive director of the Observer Research Foundation America, called 2025 a “testing year” for the bilateral relationship. He pointed to two major challenges that strained ties: high U.S. tariffs on Indian goods and renewed U.S. engagement with Pakistan.

“The two biggest challenges have been tariffs, which continue very high—50% on India, among the highest globally,” Jaishankar said. He added that the U.S.-Pakistan relationship also saw a “slight restart,” particularly at the military leadership level.

These developments have caused some erosion of trust between Washington and New Delhi, even though the relationship began the year on a promising note.

Despite tensions, 2025 also brought significant progress in less visible areas. Jaishankar described it as “paradoxically a very good year” for U.S.-India relations in defense, technology, and energy.

On defense, the countries launched a new U.S.-India defense framework, expanded joint military exercises across all three services, and continued defense sales. Technology cooperation also advanced, with 2025 marked as a landmark year for U.S. investment in artificial intelligence in India.

Energy ties strengthened as well. Jaishankar highlighted a major deal on liquefied petroleum gas and continued progress in space cooperation. He described the overall picture as mixed: “The headlines have been negative with good reason… but beneath that surface, there’s been quite productive progress in certain areas.”

Trade continues to be the most visible and politically sensitive issue. Jaishankar said India began trade negotiations early in 2025 with the Trump administration, aiming to finalize a deal by April following Vice President JD Vance’s visit to India.

“The terms of reference were signed between the U.S. and India, so it was quite in an advanced state already,” he said. Delays occurred due to operational differences and unrelated issues, such as India’s purchases of Russian oil, which got tied to the trade talks. He added that the deal remains “within reach,” but political factors, rather than economics, are slowing progress.

Meanwhile, India concluded trade agreements with the U.K., Oman, and New Zealand, restarted talks with Canada, and made progress with the European Union and Israel. Despite tariffs, bilateral trade has grown. Indian exports to the U.S. rose nearly 25% in the first eight months of 2025, while U.S. exports to India increased only 3%.

Jaishankar said this shows President Trump’s goal of balancing trade between the U.S. and India is not being met. While some sectors face challenges, overall trade has not been as affected as feared.

In late 2025, Prime Minister Narendra Modi and President Donald Trump spoke at least four times. Cabinet-level engagement also resumed, signaling efforts to stabilize the relationship. Jaishankar noted “some fruitful agreements on defense and energy” emerged from these discussions.

The revival of U.S.-Pakistan ties has unsettled New Delhi. Jaishankar described the relationship as “still substantively quite thin,” with no major U.S. defense sales and limited trade. He said the U.S. sees Pakistan as strategically useful in the Middle East, including Afghanistan, Iran, Gaza, and Saudi Arabia.

Pakistan also offers modest economic opportunities in critical minerals and cryptocurrency, but these are small compared to the U.S.-India economic relationship, he noted.

India and the U.S. have developed a broad partnership over the past two decades. Cooperation spans defense, technology, education, and people-to-people ties. Despite periodic turbulence, both governments describe the relationship as one of the most consequential of the 21st century.