US-India Trade Deal in the Works, Says Donald Trump
US President Donald Trump has indicated that India is negotiating a trade deal along the lines of a new agreement with Indonesia, which would grant the US greater market access. The Indonesian deal reportedly involves a 19% tariff on its US-bound imports, with zero tariffs on US exports to Indonesia. This announcement heightens pressure on Indian and US negotiators, who are working to finalize an agreement before Trump's August 1 deadline to avert the threat of significant punitive tariffs.
Unpacked:
Key Indian sectors potentially affected include agriculture, especially dairy, where India has resisted US demands, and industries exporting textiles, chemicals, and machinery to the US. The actual impact depends on the final deal’s terms, but India’s large agricultural workforce and export-oriented manufacturing make these areas particularly sensitive to changes in US market access and tariff rates.
Negotiations have involved multiple rounds since March 2025, with both sides visiting each other’s capitals. Major sticking points include US demands for greater access to India’s agricultural markets, especially dairy, and India’s reluctance to compromise on protections for its farmers. Despite progress, deadlines have been missed, and significant differences remain on key issues, reflecting the complexity of aligning both nations’ economic priorities.
If no deal is reached, the US could impose reciprocal tariffs on Indian imports, potentially in the 25–40% range, as it has done with other countries. This would likely increase costs for Indian exporters and could dampen bilateral trade growth, though recent data shows Indian exports to the US have grown despite existing tariffs. India has stated it does not negotiate under deadline pressure, suggesting it may accept some tariff pain.
The US is pursuing a similar model with India as with Indonesia: reduced tariffs on US exports and maintained or modest tariffs on imports to the US. The Indonesia deal sets a 19% tariff on its US-bound goods, with zero tariffs on US exports there. The UK and China have also reached agreements, but terms vary by country. The US aims for greater market access globally, but each deal reflects unique bilateral dynamics and negotiation outcomes.