India and the U.S. still haven’t reached a final agreement on a small trade deal after five rounds of talks. The deadline is August 1. The talks have stopped because the U.S. wants lower tariffs on Indian dairy and agricultural products, but the U.S. hasn’t agreed to lower tariffs on Indian steel, aluminum, and cars.
When’s the Deadline?
Unless an interim agreement is reached, scheduled U.S. tariffs would take effect on August 1.
Rajesh Agrawal, India’s top negotiator, has led cordial but challenging talks from Washington. The United States is advocating for increased hope for an interim agreement and market access for American agricultural products.
Washington and New Delhi negotiations have come to a halt because the United States hasn’t lowered its high steel and auto tariffs, and India fears that further tariff cuts will harm its farmers.
Why It Matters ?
A deal would spare Indian exports from high U.S. tariffs for up to 26%.
It might make it simpler for Indian products, such as textiles, jewelry, and gems, to enter the American market.
Market disruptions and decreased competitiveness are risks of disagreement.
How Do They Look for to Fill the Gaps?
India has proposed to eliminate duties on 60% of U.S. imports and reduce average tariffs from about 13% to less than 4%.
Discussions are still going on: Piyush Goyal, India’s trade minister, stated that new rounds of negotiations are scheduled for late July or early August, and that an interim agreement is still possible.
US Lindsey Graham’s Warning
U.S. Senator Lindsey Graham warned that Trump might impose 100% tariffs on nations that continue to purchase Russian oil, including China, Brazil, and India.
“If you keep buying cheap Russian oil… we’re going to tear the hell out of you and we’re going to crush your economy… what you are doing is blood money.”
His remarks increase geopolitical pressure, which affects how quickly India and the United States want a deal, even though they are not specifically related to trade deal negotiations.
Though it is unlikely that a deal will be finalized before August 1, both parties intend to postpone difficult aspects and strive for a more comprehensive agreement by September or October.
The rupee and markets may be impacted by new U.S. tariffs on Indian exports, but Indian assets have so far proven resilient. The Finance Ministry anticipates a deal would increase Indian exports and support growth.
In a difficult conflict, the United States is standing its ground while India opposes significant reductions in sensitive tariffs. Both parties may decide on a partial agreement now and save the remainder for a comprehensive agreement by fall, as they have only a few days to avoid high trade levies. Geopolitical tariffs on Russian oil trade, however, are a new wild card that could quickly change priorities.