India-US Trade Deal Near Finalisation Amid Trump Tariff Pause

K N Mishra

    07/Jul/2025

What’s covered under the Article:

  • India and the US are close to finalising a mini trade deal, just before the 90-day pause on Trump’s reciprocal tariffs ends on July 9.

  • Talks cover tariff cuts on select US products like pecans and blueberries, while India safeguards sensitive sectors like dairy and agriculture.

  • The final decision is expected within 24-48 hours, setting the stage for a broader Bilateral Trade Agreement after the Trump tariff deadline.

The India-US trade relationship has reached a critical juncture as both nations are poised to finalise a mini trade deal within the next 24 to 48 hours, according to reports by CNBC-TV18. This comes as the 90-day suspension period of former US President Donald Trump’s reciprocal tariff regime nears its end on July 9.

The average tariff under the new mini-deal is expected to hover around 10%, offering relief to both nations amidst ongoing global trade disruptions and rising economic pressures. Notably, the finalisation of this mini-deal would pave the way for a broader Bilateral Trade Agreement (BTA), expected to be initiated after July 9.

Trump’s Tariff Pressure & India’s Response

The situation traces back to April 2, when President Trump declared a 10% baseline tariff on most imports under his ‘Liberation Day’ campaign. He warned of second-wave tariffs of up to 26-27% on countries with "unfair trade practices"—India included. This announcement sent shockwaves across global markets.

India swiftly responded by opening negotiation channels. By April 5, the first tariff wave had taken effect, prompting India to propose lowering tariffs on key US exports such as Harley-Davidson motorcycles, whiskey, and IT hardware, while protecting sensitive domestic sectors like dairy and agriculture.

A negotiation framework was signed in April, known as the Terms of Reference, outlining priority areas like tariff reduction, market access, and digital goods, while excluding thorny issues like immigration and intellectual property rights (IPR).

India proposed zero-duty status on some strategic imports under its Production Linked Incentive (PLI) scheme, and a “forward Most Favoured Nation (MFN)” clause, which would ensure that if India offered better trade terms to any other country in the future, the US would receive the same.

Progress Through May and June

On April 9, Trump granted a 90-day pause on implementing the harsher 26-27% tariffs. This temporary relief allowed for deeper bilateral engagement.

Commerce Minister Piyush Goyal held key rounds of talks with US counterparts on May 20 and May 23 in Washington D.C., during which both sides accelerated efforts to lock in a “mini-deal” by early July.

India agreed to lower tariffs on specific American goods, including pecan nuts and blueberries, while resisting pressure to liberalize dairy and wheat imports. Trump praised India’s flexibility, noting its offer of “zero tariffs on key items”, which contributed to a positive market reaction, including a 1,300-point rally in the Sensex.

By June, negotiations entered the final phase, with both sides exchanging legal drafts. Sticking points remained on rules of origin, dispute resolution mechanisms, and certification requirements. Despite these hurdles, US officials stated that the deal was “90% complete.”

July Talks & Final Approvals

On July 1, External Affairs Minister S Jaishankar emphasised the need for mutual compromise, reiterating India’s firm stance on excluding rice and dairy from the agreement. The US, meanwhile, continued pushing for greater agricultural access.

On July 6, Trump extended the tariff implementation deadline to August 1, indicating satisfaction with India’s engagement. He issued a warning to other countries not making progress, stating they risked additional tariffs.

By July 7, talks had intensified. US Treasury Secretary Bessent described the deal as “very close,” and financial markets stabilised in anticipation.

That same day, Trump confirmed that new reciprocal tariff letters would be sent to countries, including those in BRICS (Brazil, Russia, India, China, South Africa). He threatened an extra 10% tariff on any BRICS-aligned country, deepening the geopolitical undertones of the deal.

Key Features of the India-US Mini Deal

  • Tariff Reductions: India is likely to offer annual tariff quotas for specific labour-intensive products, such as textiles and leather goods, while receiving concessions on pecan nuts and blueberries.

  • PLI Compatibility: Certain zero-duty provisions will align with India's Production Linked Incentive schemes to support export-oriented manufacturing.

  • Dispute Resolution: A new mechanism to resolve bilateral trade conflicts swiftly is reportedly being finalised, though some points remain under discussion.

  • No Concessions on Dairy: India has maintained its red line on dairy and rice imports, due to domestic political and economic sensitivities.

  • Forward MFN Clause: India is expected to include a clause offering future equal treatment to the US, should it strike better deals with other nations later.

Strategic & Political Impact

The deal, though small in scope, holds significant strategic importance. With the US growing increasingly vocal about BRICS cooperation, this agreement helps India retain favourable status amid changing global alliances.

For India, the mini-deal also provides a diplomatic win, proving its ability to negotiate on equal footing, even under economic pressure.

Commerce Minister Piyush Goyal highlighted this independence, stating: “India negotiates on its own terms, with its own priorities.”

The final deal could also help the ruling NDA project trade and diplomatic success ahead of state elections, particularly in economically sensitive regions.

Conclusion: A Pivotal Moment in India-US Trade Relations

With a final announcement expected within hours, the mini-deal symbolizes India’s evolving trade assertiveness. It is not just a commercial arrangement but also a strategic positioning tool in a multipolar world shaped by tariff wars, shifting alliances, and global uncertainty.

As the Trump administration tightens its trade policies and amplifies rhetoric against BRICS nations, India finds itself walking a tightrope between economic pragmatism and geopolitical alignment. The success of this deal may well set the tone for a comprehensive Bilateral Trade Agreement in the months to come.


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