Negotiations Continue Amid Tariff Disputes
Trade discussions between India and the United States have been extended into next week as both sides work toward an interim trade agreement before the July 9 deadline. The negotiations, which focus on tariff reductions in the farming and auto sectors, are part of broader efforts to enhance market access, supply chain resilience, and trade integration.
A U.S. delegation, led by senior officials from the Office of the United States Trade Representative (USTR), has been engaged in talks with Indian trade officials, headed by chief negotiator Rajesh Agrawal. The discussions, initially expected to conclude by Friday, will now continue into Monday and Tuesday to resolve outstanding differences.
Key Issues in the Trade Talks
The negotiations are part of a phased effort to double bilateral trade to $500 billion by 2030, a goal agreed upon by Indian Prime Minister Narendra Modi and U.S. President Donald Trump in February. The interim deal could lead to the revocation of 26% reciprocal tariffs on Indian goods, which have been temporarily paused for 90 days.
However, India is resisting U.S. demands to open its agricultural and dairy markets, citing concerns over the impact on millions of small farmers who cannot compete with heavily subsidized American products. Indian officials have also indicated that New Delhi may pursue a complaint at the World Trade Organization (WTO) against U.S. tariff hikes on steel and aluminum, while simultaneously working toward a bilateral resolution.
Impact on Trade and Exports
India’s exports to the U.S. surged by 28% year-on-year, reaching $37.7 billion in the January–April period, largely due to front-loading of shipments ahead of tariff hikes in April. Imports from the U.S. rose to $14.4 billion, widening the trade surplus in India’s favor.
Many Indian exporters have delayed shipments to the U.S. in recent weeks, fearing that their cargo may not arrive before the July 9 deadline, potentially subjecting them to higher tariffs.
Next Steps in the Negotiations
The U.S. delegation’s visit follows Indian Commerce Minister Piyush Goyal’s recent trip to Washington, where he engaged in high-level discussions with U.S. Commerce Secretary Howard Lutnick. While the interim deal is expected to be finalized soon, broader trade negotiations will continue beyond July, with a comprehensive agreement likely by September-October.
India has proposed significant tariff reductions, potentially lowering average duties from 13% to 4%, in exchange for exemptions from U.S. tariff hikes. The U.S., meanwhile, is seeking greater market access for agricultural and dairy products, but India remains firm on protecting its domestic farming sector.
Both nations are working toward a balanced trade agreement, aiming to strengthen economic ties while addressing key concerns on tariffs and market access.
