Tariff uncertainty continues: US team to visit India in mid-Aug, well after Aug 1 ‘hard deadline'
While India and the US have agreed on a wide range of tariff lines, the negotiations — which currently only involve market access for goods — are stuck over sensitive sectors such as agriculture and automobiles, which are key job creators in India.
The new round of talks beyond the August 1 deadline comes amid growing suspense over whether India will face 26 per cent reciprocal tariffs starting August 1, as US Commerce Secretary Howard Lutnick on Sunday said that August 1 is a 'hard deadline' for countries to begin paying tariffs.
'That's a hard deadline, so on August 1, the new tariff rates will come in… Nothing stops countries from talking to us after August 1, but they're going to start paying the tariffs on August 1,' Lutnick said in a television interview on Sunday.
Notably, President Donald Trump's deadline for implementation of reciprocal tariffs has shifted from April 1 to July 9, and now to August 1. While Trump has reiterated that a deal with India is close, India could face tariffs of up to 26 per cent if both countries fail to reach an agreement.
Government officials have maintained that India is aiming to sign a bilateral trade agreement (BTA) by the end of the year, which would provide market access in labour-intensive sectors and ensure a significant tariff differential compared to its Asian peers.
Lutnick also said that smaller countries — including those in Latin America, the Caribbean, and many in Africa — would face a baseline tariff of 10 per cent. 'The bigger economies will either open themselves up or they'll pay a fair tariff to America,' he said.
Trade experts have pointed out that, despite being presented as trade 'agreements', Trump's deals do not meet WTO standards for Free Trade Agreements (FTAs). Under WTO rules, FTAs require mutual tariff reductions on a substantial share of trade.
'Under the Trump model, only the partner country lowers its Most-Favoured-Nation (MFN) tariffs, while the US makes no reciprocal cuts. Trump lacks Fast Track Trade Authority from Congress to reduce MFN tariffs. Instead, he's offering to roll back only the 'Liberation Day' tariffs imposed in April under emergency powers — tariffs that a US federal court has already ruled unlawful. The case is under appeal, but the legal basis remains fragile,' the think tank Global Trade Research Initiative (GTRI) said.
For India, those April tariffs added a 26 per cent surcharge on top of normal US tariffs. Even if a deal is struck, Indian exports may still face a minimum 10 per cent additional levy, making it a pressured compromise, not a true partnership, GTRI said in a report.
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