After negotiations for a temporary trade agreement with the US stalled due to geopolitical issues and US President Donald Trump’s announcement of further tariffs in reaction to New Delhi’s imports of Russian oil, India is readjusting its expectations.
The visit of the American team for the sixth round of bilateral trade negotiations, which would begin the week of August 25, was negotiated by US and Indian negotiators in July. Now, that visit has been canceled. Nonetheless, government insiders stated that New Delhi is cautiously hopeful that a breakthrough on the first tranche of the trade pact could occur by the October-November timeframe in the fall. The government is simultaneously preparing for the chance that the agreement won’t come to pass.
The US government implemented a 25% reciprocal tariff on Indian imports on August 7 after the August 1 deadline for a minor deal was missed. Citing India’s purchases of crude oil from Russia, it also declared an additional 25% duty on Indian shipments to the US. On August 27, the cumulative 50% tariff increase is expected to go into effect.
Trump rejected the prospect of new trade talks with India on August 7. One of the officials mentioned above stated a week later that the US negotiating team’s trip to New Delhi had been rescheduled. The United States has concluded trade agreements with the European Union, Japan, the Philippines, Vietnam, Indonesia, and the United Kingdom. In spite of these agreements, the US has imposed 10-20% tariffs on each of these nations in exchange for increased market access. These “quick trade deals” have drawn criticism for being unfair and biased.
In order to address Washington’s concerns with the growing trade deficit with India, the commerce department has requested that other government agencies and ministries closely examine goods that can be redirected from certain nations to the US.