Tariff Talks Between India and US Face Major Hurdles

The United States is not ready to lower its 25% tariff on Indian goods under the proposed trade deal. Washington says it doesn’t want to give India a better rate than other Asian countries like Pakistan (19%), Bangladesh (20%), and Indonesia (19%).

A US official, speaking anonymously, said the offer depends on what India is willing to do in return. “Can India give zero tariffs on all American products? That would be great, but I don’t think that will happen,” the official said.

One of the biggest sticking points in the talks is India’s reluctance to open its dairy and farm markets. The US wants more access for its products like soybeans, corn, and dairy items.

India, on the other hand, is asking for a 15% tariff rate so that its labour-intensive exports can compete better in the US market against other Asian countries. Negotiations are ongoing, but the issue remains unresolved as both sides try to finalize a deal by November.

Indian Commerce Secretary Rajesh Agrawal recently led a team of negotiators to Washington to discuss the remaining issues.

Indonesia has already reached a deal with the US, cutting tariffs from 32% to 19% and removing barriers on nearly all American exports — including agricultural goods, seafood, technology products, and chemicals. The White House said this agreement would create “meaningful market access” for US businesses and help support American jobs.

The trade talks have also been complicated by political tensions. In August, the US imposed a 25% reciprocal tariff and another 25% duty on Indian goods because of India’s continued purchase of Russian oil — bringing the total tariff to 50%. Washington has said India must stop buying Russian oil before the trade deal can move forward.

President Donald Trump recently claimed that Prime Minister Narendra Modi had promised to gradually stop buying Russian oil. However, India’s Ministry of External Affairs (MEA) said that the country’s energy decisions are based on what’s best for Indian consumers and added that no recent phone call between Modi and Trump took place.

Commerce Secretary Agrawal said India is looking for a “win-win” outcome that benefits both countries. He added that India also wants to nearly double its current energy imports from the US, which are currently worth about $12–13 billion.

Since the new tariffs took effect, Indian exports to the US have dropped sharply. In September — the first full month under the 50% tariff — exports fell 20.3% to $5.5 billion, marking the fourth straight monthly decline.