India Eyes Fall Deadline For US Deal As Trump Threatens Tariffs

Indian officials are planning to continue negotiating with the US for a bilateral trade deal by fall of this year even if US President Donald Trump follows through with threatened tariffs this week, people familiar with the matter said.

New Delhi is less optimistic about securing an interim agreement with the Trump administration before an Aug. 1 deadline when higher US duties kick in, the people said, asking not to be identified as the discussions are private. If India is slapped with higher duties on its imports this week, officials see this as a temporary measure until talks on a broader bilateral deal are concluded in the fall, they said.

India’s Ministry of Commerce and Industry didn’t immediately respond to an email seeking further information.

Trump signaled Tuesday that India may be hit with a tariff of 20% to 25%, while cautioning the rate hadn’t been finalized yet. Any levy of that magnitude would be a blow to the South Asian nation, which had been one of the first countries to begin trade negotiations with the Trump administration, and had been seeking lower rates than the 19% given to Indonesia and the Philippines. 

While failure to secure an interim deal would be concerning to New Delhi, officials see any tariff hike as a temporary disadvantage, people familiar with the matter said. Negotiations for the broader deal are on track, with a team from the US expected to visit India during August, they said.

Internal calculations suggests about 10% of exports would be affected in July to September if India is slapped with a tariff rate above 25%, one of the people said. Sectors including electronic goods, gems and jewelery, would be impacted, the person said.

India and the US had already finalized the terms of reference for a broad bilateral trade deal during Vice President JD Vance’s trip to India in April, and had committed to a fall deadline for that. The two sides were negotiating a multi-phase approach to the deal, with an interim agreement expected to cover the tariff. 

Trump had initially threatened India with a 26% import tariff. Bloomberg News previously reported that both sides were working toward a deal that would reduce India’s proposed tariffs to below 20%. 

New Delhi is still waiting to hear from the White House on the tariff levels, an official told reporters earlier this week. Negotiations had hit a hurdle around US demands for greater access to India’s agriculture, dairy and automobiles sectors. India had been pushing for exemptions from the US sectoral tariffs, particularly in pharmaceuticals.