30-07-2025
How to rattle a cage before making a deal
Former co-producer and host of the reality TV series that judged the business skills - and nerves - of contestants, The Apprentice, Donald Trump is rattling the cage as India is set to miss the August 1 deadline to sign a trade deal with the US. Now, as US president, Trump's latest statement, threatening penal tariffs over and above a retaliatory 25% for India buying arms and oil from Russia, will widen the scope of negotiations underway for an expanded trade agreement with the US. The two countries are headed for a sixth round of talks on an early harvest deal expected by October-November. Arms and energy represent low-hanging fruit for India to trim its trade surplus with the US. Russia isn't exporting much by way of arms, as it wages its war in Ukraine. This naturally forces India, the world's largest importer, to shop elsewhere. As far as Russian oil goes, China, too, is sidestepping Western sanctions. Not only will the US need to prevail upon China, but it will also have to ensure offsetting production increases by the clutch of deals the US has signed while keeping retaliatory tariffs on hold, the common thread appears to be a combination of levies and investment commitments. This addresses reciprocal taxation, and lends itself to easier agreement. Market access - which India brings to the table - is, however, a more complex issue where tariff action may not be effective against non-tariff barriers. Crafting a trade deal with India requires careful consideration of India's no-go areas like agriculture.
Available commentary on the India-US trade framework negotiations suggests there are no deal breakers in sight, and it's more a matter of fixing details. Which is comforting news for New Delhi, because Trump may be a hard negotiator, but he's also a deal-maker. Tariffs on Indian exports to the US, if imposed, are being seen as a temporary measure that will be superseded by a deal announced a few months from now. That would count as among the quickest trade deals India has stitched up with any of its trading partners. Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Regulators promote exchanges; can they stifle one? Watch IEX
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