Trump hardens position as India, US trade teams resume talks for pact

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Continuing his hard negotiating posture, US President Donald Trump has indicated once again that India must dismantle all its import tariffs on American goods as the two countries resumed their talks for a bilateral trade agreement in Washington this week.

In return, the US may lower the reciprocal tariffs of 26 per cent on Indian goods, set to be imposed on August 1, to below 20 per cent, Trump suggested on Tuesday. He was giving specifics of his country’s proposed trade deal with Indonesia to reporters while drawing parallels with India.

“If the US maintains such a hard posture for an interim deal, India may just not go for a mini deal on August 1 and instead take more time to negotiate a full-fledged BTA where both sides make concessions. Anything else can’t have political acceptance,” a source tracking the matter told businessline.

Steep reduction in import tariffs across sectors

Conditional market access for sensitive agriculture, dairy products

Exceptions in India’s GM policy to allow US soybean, corn

Lowering of tariffs on cars in line with UK deal

Include rules on digital trade, government procurement in deal

Trump said India is working on a trade deal similar to the one recently signed between the US and Indonesia. That deal allows US goods to enter Indonesia tariff-free, while Indonesian exports to the US face a 19 per cent tariff.

“We made a deal with Indonesia. I spoke to their really great president…and we made the deal. We have full access to Indonesia, everything…We will pay no tariffs. They are giving us access to Indonesia, which we never had. That’s probably the biggest part of the deal…India is basically working along that same line,” Trump told reporters.

The US President reiterated his claim that the US was going to have access into the Indian market. “We’re going to have access to India. You have to understand, we had no access to any of these countries. Our people couldn’t go in, and now we’re getting access because of what we’re doing with the tariffs,” he said.

New Delhi is anxious about the steep demands that Washington has been making across sectors, which includes automobiles and the sensitive dairy and agriculture items, including GM products such as corn and soyabean, digital trade and government procurement. 

On the other hand, it is not willing to give additional market access to India in areas of its interest such as electronics, textiles & garments, carpets, leather, shrimps and pharmaceuticals.

In fact, Washington has also not yet agreed to roll back the entire 26 per cent reciprocal tariffs on India (as evident from the 19 per cent tariff it wants to impose on Indonesia despite the trade deal).

Lower import barriers for labour-intensive products like garments, electronics, shrimps

Withdrawal of US reciprocal duties of 26 per cent, including 10 per cent baseline tariffs already imposed

Rollback of sweeping tariffs of 50 per cent on steel, aluminium; 25 per cent on auto sector

Easing of issuance of work visas for Indians

A possible resumption of discussions on a bilateral social security deal

India’s demand for a withdrawal of sweeping sectoral tariffs of 50 per cent on steel and aluminium and 25 per cent on automobile sector already imposed is also not being seriously heeded to, the source added.

“If the US doesn’t soften its stance, there may be no deal on August 1. In fact, India is preparing itself for tariffs that may be announced that day on its products as well as on products from competitor countries,” the source said.  

On Tuesday, India’s chief negotiator for the trade deal with the US, Rajesh Agarwal, said India was waiting to see how the full spectrum of the US tariff rollout and various trade deals being negotiated by Washington play out before it draws up a back up plan for the industry.

“I think any back up or plan has to be prepared after we know the full effect of the tariff. Today, on July 15, I don’t think we are in a position to guesstimate what is the differential tariffs that is going to play out on August 1. So, I think that is something we need to wait and watch,” he said.

Trump had announced reciprocal tariffs for most trade partners with which the US had a trade deficit in April this year and then suspended them till July 9, except a baseline tariff of 10 per cent. 

As most countries, including India, could not reach an interim deal with the US by July 9, Trump decided to push back the tariff deadline to August 1.

Published on July 16, 2025



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