logo
Ahead of Aug 1, Trump says India faces up to 25% tariff; but multiple question marks loom in the horizon

Ahead of Aug 1, Trump says India faces up to 25% tariff; but multiple question marks loom in the horizon

Indian Express5 days ago
With just a day left for the August 1 deadline set by the Donald Trump administration to wrap up agreements with its trading partners, the American President threatened tariffs of up to 25 per cent on Indian imports if the elusive bilateral trade agreement between the two countries is not in place by that date. 'They are going to pay 25 per cent,' Trump said on Tuesday.
When asked during a press interaction if India would pay tariffs of 20 per cent to 25 per cent, Trump said, 'Yeah, I think so. India has been – they're my friends.' US Trade Representative Jamieson Greer had told CNBC on Monday that the trade agreement with India would need more discussion between the two countries.
Trump had in April set the tariff on Indian goods imported into the US at 26 per cent on April 2, before pausing his so-called 'reciprocal' levies. Earlier, on Monday, Trump had said he is planning tariffs at 'somewhere in the 15-20 per cent range' for 'the rest of the world'. That would mean a significant increase on the 10 per cent 'baseline' tariff that applies to most trading partners now.
India Deal
Given how talks between Indian and American negotiators have proceeded, an interim deal still seems distant and is unlikely to be clinched before September, with October a possible outer deadline. Indications are a sixth round of talks between the two negotiating teams will take discussions forward in August.
For New Delhi, a tariff of 25 per cent is bad news, but something that policy circles seem to have already factored in. This rate essentially means going back to the reciprocal tariff level, which was 26 per cent. The resolve from the Indian side would be to push the interim deal in the meantime, to ensure that Indian goods manage a discounted headline tariff, as has been wrangled by other countries that have struck a deal over the last couple of weeks. Trump's threat of steep tariffs on BRICS countries for buying Russian oil is also a looming concern and the big question is if the 10 per cent BRICS tariff threatened by Trump would be over and above this 26 per cent. Without the BRICS levy, India's 26 per cent will compare reasonably well with countries such as Indonesia (19 per cent) and Vietnam (20-40 per cent) that have wrapped up deals, and could have an advantage over the current levels of tariffs faced by China (30-34 per cent) and Bangladesh (35 per cent). The equation changes when the additional levies are factored in.
Once the interim deal is clinched, if the final US headline tariff on India ends up between 10 per cent and 15 per cent, the tariff points offered to the UK and Japan, respectively, New Delhi would have reasons to be satisfied. The advantage starts to taper off once the tariff goes over 15 per cent and inches up closer to 20 per cent, as was offered to Vietnam. A trans-shipment clause, of the kind slapped on Vietnam which levies an additional 20 per cent tariff, could be a problem for India too, given that a lot of Indian exports have inputs and intermediate goods in sectors such as pharma, engineering goods and electronics coming in from outside, including China. Also, New Delhi will be closely looking for clarity on the final American duty offer on China, given its belief that Trump will maintain a tariff differential. US and Chinese officials wrapped up two days of discussions in Stockholm on Tuesday, with no breakthrough announced. After the talks, China's top trade negotiator Li Chenggang declared that the two sides agreed to push for an extension of a 90-day tariff truce struck in mid-May, without specifying when and for how long this extension kicks in.
For Indian negotiators, extra tariffs on steel and aluminium, over and above the baseline, is an added complication, alongside the proposed BRICS tariff. Trump's insistence on zero duty access to the Indian markets, like in its deals with Vietnam and Indonesia, is also a problem for India. New Delhi is, however, willing to offer concessions on high-value purchases that the US is keen to package as part of its tariff-setting exercise, like the way it got the EU and Japan to sign up for a commitment on investments and purchases of American goods. India may be open to purchasing three big-ticket items from the US: defence equipment, natural gas imports and nuclear reactors.
On specific sectors such as auto or consumer non-durables, India is likely to follow a quota system that progressively opens up market access over a span of multiple years, like it did in the UK deal signed last week.
Exporters Struggle
Meanwhile, as the uncertainty continues, India's exporters are struggling to navigate the way forward because buyers in the US are not clear as to what the final tariff will be, and are consequently holding back orders. The higher tariffs that the US has imposed on China means a number of Chinese manufacturers are now also rerouting shipments to Europe at throwaway prices, which is impacting India's exports to the EU as well. India, like other countries, had frontloaded shipments ahead of the reciprocal tariff deadline for the ongoing Spring-Summer season, but there is now a question mark over the orders for the Fall-Winter season from October to March.
Once the official level discussions wrap up by mid-August, there is a sense that a final call on the deal could come down to a conversation between the two leaders, Prime Minister Narendra Modi and President Trump. This is especially so since it is Trump who is the trade negotiator-in-chief. For India, the best-case scenario would be to get a deal of some sort now, and then build on that in the future negotiations that could run into 2026, experts said.
Anil Sasi is National Business Editor with the Indian Express and writes on business and finance issues. He has worked with The Hindu Business Line and Business Standard and is an alumnus of Delhi University. ... Read More
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Morne Morkel hails Mohammed Siraj, reflects on Day 4 twist and rain delay
Morne Morkel hails Mohammed Siraj, reflects on Day 4 twist and rain delay

Time of India

timea few seconds ago

  • Time of India

Morne Morkel hails Mohammed Siraj, reflects on Day 4 twist and rain delay

Trump Breaks Silence on India & Russia's Oil 'Breakup' | 'New Delhi May Stop…' 'I heard India may stop buying Russian oil,' said US President Donald Trump, calling it a 'good step.' But reports say Indian refiners are still sourcing discounted Russian crude. As U.S. pressure mounts, New Delhi defends its ties with Moscow as 'steady and time-tested,' while balancing key strategic relations with Washington. Will India bow to American pressure or stick with its long-time energy partner? 29.0K views | 1 day ago

CoinDCX to absorb $44 million security breach loss: CEO Sumit Gupta
CoinDCX to absorb $44 million security breach loss: CEO Sumit Gupta

Business Standard

timea few seconds ago

  • Business Standard

CoinDCX to absorb $44 million security breach loss: CEO Sumit Gupta

Gupta maintained that customer funds on the platform were not compromised since they were parked on a cold wallet infrastructure premium Ajinkya Kawale Mumbai Listen to This Article Crypto exchange platform CoinDCX will absorb the entire $44 million loss -- equivalent to about three to four months of its revenue -- from an alleged security breach on its balance sheet this financial year (FY26), said Sumit Gupta, co-founder and CEO of the company. The theft was reported on July 19. The case was the second security breach at an Indian crypto exchange after WazirX's $230 million theft in July last year. 'We have absorbed the (lost) amount on our balance sheet. We have a healthy balance sheet. It's like three to four months of our revenue. Business continues

Republicans jostle for post-Trump future, Democrats still soul-searching as prep begins for 2028 presidential elections
Republicans jostle for post-Trump future, Democrats still soul-searching as prep begins for 2028 presidential elections

First Post

timea few seconds ago

  • First Post

Republicans jostle for post-Trump future, Democrats still soul-searching as prep begins for 2028 presidential elections

Kamala Harris has offered her clearest signal yet that she may seek higher office, even as Democrats continue searching for their lost identity. Meanwhile, Republican hopefuls face the challenge of building their profiles while staying onside with Donald Trump read more A member of the media uses phone as a screen displays the presidential debate, as Republican presidential nominee, former US President Donald Trump and Democratic presidential nominee, US Vice President Kamala Harris attend a presidential debate hosted by ABC in Philadelphia, Pennsylvania, US, September 10, 2024. File Image/Reuters Former vice-president Kamala Harris has ruled out a bid for California governor in 2026 but offered her clearest signal yet that she may seek higher office. Speaking on The Late Show with Stephen Colbert on Wednesday (July 31), Harris said she planned to 'travel the country' and 'listen to people' without 'asking for their vote', remarks that fuelled speculation about a third presidential run in 2028. Harris remains one of the best-known potential Democratic contenders, bolstered by a strong donor network and name recognition from her time as vice-president. Yet strategists warn that the nomination will be far from guaranteed. Party operatives predict 'a contested primary' with a large field that is already beginning to take shape. STORY CONTINUES BELOW THIS AD The Democrats making early moves Several figures in the party are raising their profiles ahead of the next election cycle. Illinois governor JB Pritzker recently delivered a high-profile speech in New Hampshire, while Arizona senator Ruben Gallego has scheduled events in the state later this month. California governor Gavin Newsom, Kentucky governor Andy Beshear and congressman Ro Khanna have all toured early-voting states. Former transportation secretary Pete Buttigieg and Maryland governor Wes Moore have also been active, turning to podcasts and policy discussions to appeal to the Democratic base. Some potential contenders, such as Khanna and congresswoman Alexandria Ocasio-Cortez, have already built up significant campaign funds that could be transferred to a presidential run. The field is expected to be ideologically diverse, stretching from centrists such as former Chicago mayor Rahm Emanuel to progressives including Khanna, who was among the earliest lawmakers to call for a ceasefire during the Biden administration. Party strategists believe debates over foreign policy, the cost of living and left-wing populist energy will define the race. 'It's gonna be messy and personal … but I think it's going to help us shape as a party, what we believe,' said Amanda Litman, a former staffer on the Obama and Clinton campaigns. How Republicans are preparing for 2028 On the other side of the political divide, Republican hopefuls face the challenge of building their profiles while staying onside with Donald Trump, whose grip on the GOP base remains strong. Trump frequently jokes about seeking a third term despite constitutional limits, making it risky for would-be successors to appear disloyal. Vice-president JD Vance is widely regarded as Trump's political heir, but other figures are manoeuvring for position. Secretary of state Marco Rubio, Florida governor Ron DeSantis, Texas governor Greg Abbott and Virginia governor Glenn Youngkin are seen as likely contenders. Rubio's 2016 presidential bid gives him a measure of national recognition, while DeSantis has repaired relations with Trump after a fraught 2024 campaign. STORY CONTINUES BELOW THIS AD Governors such as Youngkin, Arkansas governor Sarah Huckabee Sanders and Georgia governor Brian Kemp could appeal as leaders with independent records. Several senators – including Tim Scott, Rand Paul, Rick Scott, Josh Hawley and Tom Cotton – are also potential candidates, though they may struggle to shed the image of being tied to Washington politics. The Republican primary calendar is expected to remain unchanged, starting with Iowa, New Hampshire, South Carolina and Nevada. Youngkin, Sanders, Paul and Rick Scott have already begun visiting early primary states. While Vance holds a strong initial position, analysts note that voters in these states are also interested in Rubio and others who have remained loyal to Trump without being as closely identified with him. Whether Trump critics such as Nikki Haley can mount a credible challenge may hinge on the former president's popularity and Republican fortunes in the midterms. If Trump's second term is marred by electoral setbacks or controversy, candidates could gain space to distance themselves as they look ahead to 2028. STORY CONTINUES BELOW THIS AD

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store