India-US Bilateral Trade Agreement: US President Donald Trump warns of potential 20–25% tariffs on Indian imports, citing stalled trade negotiations. Here’s how it could impact India-US trade relations and export growth.
In a strong message ahead of a looming deadline, US President Donald Trump has warned that Indian imports could face steep tariffs of 20 to 25 percent if the bilateral trade deal between the two nations is not finalised soon. The statement comes just days before the August 1 deadline for the implementation of reciprocal tariffs on various US trading partners, including India.
Speaking aboard Air Force One on his return from a five-day trip to Scotland, President Trump said, “India is my friend. They ended the war with Pakistan at my request… but India has charged basically more tariffs than almost any other country. You just can’t do that.”
Trump’s remarks highlight the ongoing tensions between New Delhi and Washington over trade imbalances. The US President had earlier announced increased tariffs in April this year, aimed at reducing the US trade deficit. However, he temporarily lowered them to 10 percent to encourage negotiations.
US Seeks Greater Market Access in India
The United States Trade Representative (USTR), Jamieson Greer, stated on Monday that more time is required for negotiations. The US is keen on gaining better access to the Indian market, particularly for industrial goods, electric vehicles, dairy products, wines, apples, tree nuts, and genetically modified crops.
However, India has remained firm in maintaining high tariffs, especially in the agricultural and dairy sectors. Farmer groups in India have urged the government to keep these sectors out of any trade agreement entirely, citing risks to local livelihoods and food security.
India-US Bilateral Trade Agreement: A Work in Progress
Announced in February this year, the India-US Bilateral Trade Agreement aims to strengthen trade and investment ties between the two countries, with an ambitious goal to double bilateral trade to $500 billion by 2030. So far, five rounds of discussions have taken place, and a sixth round is scheduled for August 25, when a US delegation will visit India for further talks.
Despite the goodwill on both sides, a lack of consensus on key issues continues to delay the deal.
What’s at Stake for India?
India has a lot riding on its trade relationship with the United States. According to the Ministry of Commerce, India exported goods worth $86.51 billion to the US in the financial year 2024–25 (April to March). The US is India’s largest export market, accounting for nearly 20 percent of the country’s total outbound shipments.
India also enjoyed a significant trade surplus of $40.82 billion with the US during this period. However, the threat of higher tariffs could place immense pressure on India’s export growth, especially in sectors like textiles, pharmaceuticals, IT services, and gems and jewelry.
Exporters on Edge, Farmers Concerned
Exporters across India are worried that the proposed tariffs could erode their competitiveness in the US market. Higher duties would make Indian products more expensive for American consumers, potentially leading to a decline in demand.
Meanwhile, agricultural groups in India are advocating for protection from US demands. They argue that opening up markets to cheaper American agricultural products could severely impact domestic farming communities.
A Critical Moment for India-US Trade Relations
With the August 1 deadline fast approaching, the future of India-US trade relations hangs in the balance. While both nations recognize the strategic importance of a strong economic partnership, reaching a mutually beneficial agreement will require flexibility, compromise, and a focus on long-term gains.
Should the US proceed with the 20–25% tariffs, it could pose a serious challenge for India’s export sector and disrupt the momentum of bilateral trade. All eyes are now on the sixth round of talks, scheduled for August 25, where negotiators will have another chance to break the deadlock.