Has India offered Trump zero tariffs? What we know and why it matters

Al Jazeera

16-05-2025

United States President Donald Trump said on Thursday that India had offered a trade deal that proposed almost 'no tariffs' on US goods, as the South Asian nation seeks to avert higher import and export costs.
India disputed Trump's claim. But New Delhi is looking to clinch a trade deal with the US within the 90-day pause announced by Trump on April 9, on so called reciprocal tariffs for major trading partners. On May 8, the White House secured a trade agreement with the United Kingdom, two days after India inked a similar pact with it.
India's equity benchmarks jumped about 1.5 percent following Trump's comments. The Nifty 50 edged up 1.6 percent while the BSE Sensex gained 1.48 percent, reaching their highest levels in seven months.
India was one of the first countries to begin trade negotiations with the US following Prime Minister Narendra Modi's visit to the White House in February, with both sides agreeing to finalise a bilateral deal this year.
Last month, meanwhile, US Vice President JD Vance visited India and met with Prime Minister Narendra Modi, hailing what he called 'very good progress' on a trade agreement between Washington and New Delhi.
'It is very hard to sell in India, and they are offering us a deal where basically they are willing to literally charge us no tariffs,' Trump said in a meeting with executives in the Qatari capital Doha. 'They're the highest and now they're saying no tariff.'
In a statement soon after to local news agencies, India's Foreign Minister Subrahmanyam Jaishankar pushed back against Trump's claim, saying 'nothing is decided till everything is.' He added that 'any judgement on it would be premature' until a 'mutually beneficial' agreement is reached.
Trump didn't provide further details of New Delhi's apparent offer, and the Indian Ministry of Commerce and Industry didn't immediately respond to media requests for comment.
The US is India's largest trading partner, with bilateral trade totalling some $129bn in 2024. India ran a $45.7bn surplus with the US last year, mainly in the form of pharmaceutical products, electrical machinery and jewellery.
Having long complained that India's tariffs were too high and hurt US businesses, Trump pledged to impose 'reciprocal' tariffs of 27 percent on India. Those tariffs are currently on hold until early July.
A 10 percent base tariff continues to apply to India and many other nations during the pause.
India's average tariff rate is 17 percent, compared with 3.3 percent by the US, as per a report by the Indian Council for Research on International Economic Relations.
In recent weeks, India has made overtures to placate Trump's public disapproval, including lowering import duties on US goods like bourbon whiskey – down from 150 to 100 percent – and Harley-Davidson motorcycles – from 50 to 40 percent.
As part of ongoing trade talks, New Delhi has also proposed zero tariffs on car parts, on a reciprocal basis and up to a certain amount, Bloomberg reported earlier this month.
A delegation of Indian officials is set to visit the US later this month to try and move talks forward. The Reuters news agency reported that India's trade minister, Piyush Goyal, might visit too.
Trump's recent comments come days after India threatened to impose retaliatory tariffs linked to higher US duties on steel and aluminium, a sign that New Delhi is adopting a more bullish approach in its negotiations with Washington.
For now, though, trade talks are thought to be progressing well.
Reuters reported that New Delhi has offered to reduce duties to zero on 60 percent of US imports in a first phase deal, while also offering preferential access to nearly 90 percent of the merchandise India imports from the US.
In theory, this would bring the average tariff differential (the variation in tariff rates countries impose on each other) between India and the US down by 9 percentage points, significantly lowering trade barriers in the world's fifth-largest economy.
Preferential market access – or lower import entry requirements into the US compared with other countries India trades with – is being considered for key goods such as jewellery, textiles and agricultural products like bananas and grapes.
'Preferential market access for India would mean better terms of trade for these goods compared to America's other trading partners,' an Indian government official who preferred not to be named told Reuters.
To make the deal more attractive for Washington, India has also offered to ease export regulations on several high-value US imports, the first official said. These include aircraft, electric vehicles, medical devices, and hydrocarbons.
Beyond tariffs, India has also asked the US to treat it on par with other top US allies such as the UK and Japan in terms of access to critical technology sectors like artificial intelligence, biotech, and semiconductors.
India's expectation of being exempt from tariffs is at odds with the deal struck between the US and UK, in which only certain goods, based on mutual interest, had tariffs removed – as opposed to across-the-board withdrawals.
Elsewhere, US Treasury Secretary Scott Bessent last week hinted that Washington might be looking to secure 'purchase agreements' for specific products with China, as part of ongoing trade negotiations with Beijing.
As such, recent trade deals suggest that Trump's tariff strategy amounts to carve-outs on particular goods, as opposed to broad free trade agreements. Looking ahead, comments from Indian and US officials hint at a similar arrangement.
Domestic issues also stand in the way of a free trade deal. India has long used tariffs to shield agricultural markets from cheap imports. Farmers have expressed fears that Modi would weaken those protections as part of a deal with Trump.
Then, at the geopolitical level too, India is in a tricky position. While Washington sees New Delhi as a counterbalance to Beijing's growing clout, India imported $113.45bn from China last year. By contrast, it imported just $40bn from the US.
What's more, China recently warned the UK over its trade deal with the US. It accused the UK of aligning with the US in a move that could compel British companies to exclude Chinese products from their supply chains.
China has warned it is ready to hurt countries that fall in line with the US in order to pressure Beijing.
For its part, India has recently shown willingness to engage in trade deals after years of scepticism. Last week, it inked a pact with the UK that will substantially lower duties on many goods.