Key Points
- No breakthrough yet in India-US trade agreement as August 1, 2025, tariff deadline approaches.
- President Trump threatens up to 25% tariffs on Indian exports if talks fail.
- India requests deadline extension; US says no, insists on August 1 implementation.
- Sixth round of talks scheduled for August 25 in New Delhi amid rising tensions.
- Major sticking points: US access to India’s agriculture/dairy market; India’s push for lower tariffs on its exports.
- In 2024, US had a $45.7 billion trade deficit with India, mainly goods like medicines, electronics, textiles.
Washington D.C.: With just two days left until President Donald Trump’s August 1 deadline, negotiators from India and the US have failed to seal a much-anticipated trade deal. The talks, now stretched over five rounds, remain stuck on critical issues such as agricultural access, tariffs, and market openness. As a result, President Trump has publicly threatened to impose tariffs between 20% and 25% on Indian exports, a move that could significantly impact India’s key sectors.
Trump’s Hardline: “India Has Charged More Tariffs Than Almost Any Other Country”
Speaking aboard Air Force One, President Trump reiterated his stance: “I think India is a good friend, but it has charged more tariffs than almost any other country. Now this cannot go on. More tariffs can be imposed on India.” Trump has also indicated that even “friendly” countries like India face tariff hikes unless US trade grievances are addressed.
India’s Last-Minute Appeal for Extension
According to senior Indian officials, New Delhi has appealed to Washington to push the deadline past August 1, allowing both sides to keep talking until the next negotiating round in New Delhi slated for August 25. Despite Indian optimism, US Commerce Secretary Howard Lutnick has ruled out any extension, confirming that the tariffs will take effect as scheduled unless an agreement is reached beforehand.
High Stakes for Both Economies
- Trade Imbalance: In 2024, the US imported $87.4 billion worth of goods from India, while exporting $41.8 billion, producing a $45.7 billion trade deficit for the US.
- Sectors at risk: Indian exports most likely to be hit include textiles, pharmaceuticals, electronics, and clothing.
- For the US: Key demands remain greater access to India’s highly protected markets in agriculture and dairy products—a sticking point India resists due to domestic sensitivities.
What Happens Next?
The sixth and potentially decisive round of negotiations will begin in New Delhi on August 25. Indian and US officials confirm the goal is an interim “mini-deal,” with hopes for a comprehensive pact by September or October. Until then, India prepares for the prospect of higher US tariffs described as a “temporary measure” while talks continue.
“Talks are progressing well, and a delegation is expected in Delhi by mid-August,” said an Indian official, emphasizing optimism despite the looming tariff threat.
Broader Implications
- Political backdrop: Both countries are balancing significant domestic and geopolitical pressures, making the talks more complicated.
- Global trade impact: Trump’s broader tariff push affects not just India but dozens of major trading partners, reflecting a trend toward protectionism as the US seeks to trim trade deficits.
As the clock ticks toward August 1, the India-US trade relationship faces an inflection point: compromise or confrontation at the border of global commerce.
