India presses ahead with US trade talks despite looming Aug 1 tariffs

India is pushing ahead with trade deal talks with the US despite looming Trump-era tariff threats, focusing on long-term economic alignment beyond short-term disruption

India is continuing efforts to secure a bilateral trade agreement with the United States (US) by this autumn (mid-September to December), even as concerns mount over threatened tariff hikes by former US President Donald Trump. According to a report by Bloomberg on Wednesday, negotiators from India are preparing to proceed with talks regardless of whether Washington imposes new duties on Indian goods from August 1.

 

Expectations for a limited interim pact before the looming deadline have faded, the report said, but India views the potential tariff hike as a temporary hurdle. The broader trade deal under negotiation is seen as a longer-term solution that could offset short-term disruptions and reshape economic ties between the two countries.

 

Rising Trump tariff risks

Trump has warned that India could face import duties ranging from 20 to 25 per cent, though a final decision is still pending. Analysts warn that without an agreement, Indian exports could be hit harder than those of countries like Vietnam, Indonesia, or Japan, where tariff rates remain lower.

 

Internally, officials estimate that duties above 25 per cent could impact roughly 10 per cent of Indian exports during the July-September quarter, especially in sectors like electronics, gems, and jewellery.

 

Despite the threat, officials are not offering fresh concessions in the run-up to the deadline. Instead, they are preparing for continued negotiations in mid-August, when a US delegation is expected to visit New Delhi.

 

“Talks are progressing well,” a government official told Reuters. “In a worst-case scenario, Trump may go ahead with tariffs, but we believe that would be a temporary measure.”

 

Industry Minister Piyush Goyal has described progress as “fantastic”, highlighting India’s willingness to cut tariffs on a wide range of goods and ease non-tariff barriers. However, India continues to resist opening sensitive sectors such as agriculture and dairy, especially to imports of genetically modified crops or US dairy products.

 

US demands immediate duty elimination

Adding to the trade talk pressures, Washington is also pushing India to eliminate customs duties on most US products immediately after the trade deal takes effect. Under the so-called “tariff staging” framework, India typically phases out tariffs gradually. For instance, in its recent deal with the UK, India agreed to eliminate tariffs on 64 per cent of goods upfront, with others phased out over a decade.

 

However, US negotiators are demanding a much faster pace. “The US has sought from India an aggressive timeline for duty elimination. It wants zero duty on most of its products as soon as the deal comes into force, except for a few tariff lines that can be phased out in a year or two,” a government official earlier told Business Standard. “This is more aggressive than past deals,” another said.

 

India is among the Brics nations facing US scrutiny over its growing trade with Russia and ongoing efforts to reduce reliance on the US dollar in global transactions.

 

Still, both sides insist that negotiations remain constructive. US Trade Representative Jamieson Greer acknowledged that talks may spill beyond the August 1 deadline but reaffirmed Washington’s willingness to continue.

 

“India’s trade policy has long focused on protecting domestic markets,” Greer said in a CNBC interview. “The President wants deals that open everything or near everything. We need more talks to see how ambitious India wants to be.”