PM Modi, Donald Trump agree to negotiate bilateral trade agreement

US President says he will impose reciprocal tariff on India even as he acknowledges New Delhi's decision to reduce basic customs duties on certain items

Prime Minister Narendra Modi and President Donald Trump of the United States (US) have announced a plan to negotiate the first tranche of a “mutually beneficial multi-sector bilateral trade agreement” by fall 2025 or the next seven to eight months.

 

Bilateral talks for the purpose were announced even Trump said India will face his reciprocal tariff, insisting “whatever India charges, we charge them”.

 

The two countries will hold talks for increasing market access, reducing tariff and non-tariff barriers, and deepening supply chain integration, according to a joint statement about Modi and Trump’s meeting in Washington Thursday evening.

 

Hours earlier, Trump unveiled a plan to impose “reciprocal” tariffs on US trading partners to narrow its “large and persistent” annual trade deficit in goods and tackle other “unfair and unbalanced aspects” of trade. An announcement on the tariffs is expected after April 1.  READ: PM Modi Donald Trump meeting Highlights, key takeaways 

 

Trump said in a joint press conference with Modi that India has been a high-tariff nation and will face reciprocal tariffs. “Whatever India charges, we charge them,” Trump told reporters, while acknowledging New Delhi’s decision to address his concerns by cutting basic customs duties on motorcycles, waste and scrap materials, and Ethernet switches in its February 1 Union Budget.

 

“As a signal of good faith, Prime Minister Modi recently announced the reductions to India’s unfair, very strong tariffs that limit us access into the Indian market…it’s a big problem. India imposes 30, 40, 60 and even 70 per cent tariff on so many of the goods and in some cases far more than that. As an example, a 70 per cent tariff on US cars going into India, which makes it pretty much impossible to sell those cars today,” Trump said.

 

This is not the first time that India and the US are trying to seal a trade agreement. During Trump’s first term ending January 2021, India held extensive discussions with the US on a limited trade agreement but issues were not resolved.

 

Modi and Trump set a “bold new goal” – Mission 500 – to more than double total bilateral trade to $500 billion by 2030. “The leaders resolved to expand trade and investment to make their citizens more prosperous, nations stronger, economies more innovative and supply chains more resilient. They resolved to deepen the US-India trade relationship to promote growth that ensures fairness, national security and job creation,” said the statement.