Trump says US, India still negotiating after 25% US tariff threat

Business Standard

30-07-2025

President Donald Trump said on Wednesday the United States is still negotiating with India on trade after announcing earlier in the day the US will impose a 25 per cent tariff on goods imported from the country starting on Friday.
The 25 per cent tariff, as well as an unspecified penalty announced by Trump in a morning social media post, would strain relations with the world's most populous democracy. Later at the White House, the Republican president indicated there was wiggle room.
"They have one of the highest tariffs in the world now, they're willing to cut it very substantially," Trump told reporters. "We're talking to India now - we'll see what happens ... You'll know by the end of this week."
The 25 per cent figure would single out India more severely than other major trading partners, and threaten to unravel months of talks between the two countries, undermining a strategic partner of Washington's and a counterbalance to China.
What the penalty would be was not clear. Trump indicated initially it was for India buying Russian arms and oil and its non-monetary trade barriers.
When asked about the penalty at the White House, he said it was partly due to trade issues and partly because of India's involvement in the BRICS group of developing nations, which he described as hostile to the US Trump in July said the US will impose an additional 10 per cent tariff on any countries aligning themselves with the "Anti-American policies" of the BRICS.
The India announcement came as countries face a Friday deadline to reach deals on reciprocal tariffs or have a Trump-imposed tariff slapped on them. Trump on Wednesday signed a proclamation ordering 50 per cent tariffs on certain copper imports, citing national security, the White House said.
The White House had previously warned India about its high average applied tariffs - nearly 39 per cent on agricultural products - with rates climbing to 45 per cent on vegetable oils and around 50 per cent on apples and corn.
"While India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country," Trump wrote in a Truth Social post.
"They have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE - ALL THINGS NOT GOOD!"
In response to his Truth Social post, the Indian government said it was studying the implications of Trump's announcements and remained dedicated to securing a fair trade deal with the US
"India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective," it said.
Russia continued to be the top oil supplier to India during the first six months of 2025, making up 35 per cent of overall supplies.
The United States, the world's largest economy, currently has a $45.7 billion trade deficit with India, the fifth largest.
White House economic adviser Kevin Hassett said Trump has been frustrated with the progress of trade talks with India and believed the 25 per cent tariff announcement would help the situation.
The new US tax on imports from India would be higher than on many other countries that struck deals with the Trump administration recently. Vietnam's tariff is set at 20 per cent and Indonesia's at 19 per cent, while the levy for Japan and the European Union is 15 per cent.
"This is a major setback for Indian exporters, especially in sectors like textiles, footwear, and furniture, as the 25 per cent tariff will render them uncompetitive against rivals from Vietnam and China," said S.C. Ralhan, president of the Federation of Indian Export Organisation.
US and Indian negotiators have held multiple rounds of discussions to resolve contentious issues, particularly over market access into India for US agricultural and dairy products.
In its latest statement, India said it attached the utmost importance to protecting and promoting the welfare of its farmers, entrepreneurs, and small businesses.
"The government will take all steps necessary to secure our national interest, as has been the case with other trade agreements," it said.
The setback comes despite earlier commitments by Prime Minister Narendra Modi and Trump to conclude the first phase of a trade deal by autumn and expand bilateral trade to $500 billion by 2030, from $191 billion in 2024.
Since India's short but deadly conflict with arch South Asian rival Pakistan, New Delhi has been unhappy about Trump's closeness with Islamabad and has protested, which cast a shadow over trade talks.
"Politically, the relationship is in its toughest spot since the mid-1990s," said Ashok Malik, partner at advisory firm The Asia Group. "Trust has diminished. President Trump's messaging has damaged many years of careful, bipartisan nurturing of the US-India partnership in both capitals."
Besides farm products access, the US had flagged concerns over India's increasingly burdensome import-quality requirements, among its many non-tariff barriers to foreign trade, in a report released in March.
The new tariffs will impact Indian goods exports to the US, estimated at around $87 billion in 2024, including labour-intensive products such as garments, pharmaceuticals, gems and jewelry, and petrochemicals.
(Reporting by Susan Heavey, Katharine Jackson in Washington, Manoj Kumar and Aftab Ahmed in New Delhi; editing by Doina Chiacu, Bernadette Baum, Mark Heinrich, Rod Nickel)
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