Prime Highlights
- Donald Trump explained that the U.S. is almost through with negotiations on a trade agreement with India with substantially lower tariffs.
- The report precedes the July 9 deadline when suspended bilateral tariffs are to be reinstated.
Key Facts
- The 90-day tariff truce expires July 9 and could trigger a 26% American tariff on Indian products.
- Critical negotiations focus on agricultural produce, dairy produce, energy, and automobile parts.
Key Background
Previous U.S. President Donald Trump stated that the United States is close to signing a massive trade deal with India. Addressing a rally campaign, Trump stated that the agreement will provide “much less tariffs” and has the potential to shift the current terms of U.S.-India commerce. The sense of urgency comes from the imminent closure of a July 9 deadline when a 90-day tariff relief expires. Without an extension, the U.S. will impose a 26% retaliatory tariff on the most important Indian exports.
Negotiations have picked up in recent days, with senior Indian officials, including Foreign Minister S. Jaishankar and Chief Negotiator Rajesh Agrawal, staying put in Washington. The target is hammering out core differences on sensitive areas of agriculture and dairy. India has been generally reluctant to open up its dairy industry in trade agreements because of domestic political and economic compulsions, specifically safeguarding small farmers.
On the U.S. side, the negotiators are attempting to make India reduce its tariffs on American products like apples, almonds, genetically modified food, steel, and automobile components. In return, India is seeking better access for its apparel, footwear, seafood, and fresh fruits like bananas and grapes to U.S. markets. India also seeks to double its natural gas imports from the U.S. as an economic goodwill and to compensate for its $41 billion trade deficit.
The two countries are trying a step-by-step process: an interim agreement prior to July 9, and a more detailed pact by autumn. The strategy is meant to help them achieve their combined goal of $500 billion in two-way trade by 2030. But if a breakthrough is not finished on schedule, the reimposition of penalty tariffs can ride in to scotch progress and revive the specter of trade tensions between the two countries.
