TRUMP'S TARIFF CIRCUS

An interim trade deal may ease tariff tensions between India and the US, but deeper disagreements over market access and strategic priorities remain unresolved

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Barely two months after coming to power, US President Donald Trump shocked the world when he announced reciprocal tariffs on several countries, including India, on 2nd Apr ‘25.

However, after a big stock market pushback, he paused the increase for 90 days to allow space for trade negotiations. During this pause, a 10% base tariff remained applicable on all countries, including India.

This pause began on 9th April after global market turbulence and was set to expire on 9th July, when the higher rates would automatically resume.

Playing a high-stakes game, Trump postponed the deadline to 1st August, giving negotiators extra time to finalize trade agreements - including one with India.

The Indian policymakers were hoping to conclude a mini trade deal before wrapping up an overarching India-US bilateral trade agreement (BTA) later in the year, which is likely to reduce India’s merchandise trade surplus with the United States, while opening new avenues for imports and exports.

With goods exports from India to the US rising sharply in the first quarter of the fiscal year, the trade relationship continues to gain significance. India’s exports to the US rose by nearly 23% year-on-year to $25.5 billion during April to June, while imports grew by over 11% to $12.9 billion, underlining the economic stakes involved in ensuring smoother trade flows between the two countries.

THE CURRENT STATUS

As things stand, India and the United States are intensifying efforts to finalize an interim trade agreement ahead of the 1st August deadline set by Washington. While negotiations remain ongoing, an American delegation is expected to visit India in the second half of August for what would be the sixth round of discussions, likely focused on the outstanding sticking points.