The US negotiators are visiting India for the next round of talks between the two countries.
India has got a shot in the arm with the recent ruling by the US Court of International Trade that has declared US President Donald Trump’s reciprocal tariffs as illegal, prompting New Delhi to reconsider its approach to the ongoing trade negotiations with Washington. The US negotiators are visiting India for next round of talks between the two. However, the recent ruling will have impact on the outcome of talks with experts terming it a “golden opportunity” for New Delhi to negotiate a favourable deal.
US President Trump had announced reciprocal tariffs as 10 per cent baseline tariffs and country-specific duties—such as the 26 per cent levy on Indian goods. The announcement made by Trump on April 2 had led to massive reactions in the markets worldwide as Indian market had also tanked as such tariffs were deemed to disrupt the global trade order.
The Union Minister for Commerce & Industry Piyush Goyal recently said India’s much-anticipated bilateral trade agreement (BTA) with the United States is “well on track.” Commenting on the ruling he emphasised that recent developments surrounding former US President Donald Trump’s tariffs are “internal matters” of the United States. India doesn’t interfere or comment on the internal matters of other countries. It is for them to take decisions on their domestic issues, he stated. The Minister highlighted that Prime Minister Narendra Modi and President Donald Trump have reaffirmed their commitment to a multi-sectoral BTA during their meeting in February. India wants to build robust trade ties with developed nations to create new opportunities for our farmers, engineers and startups, he said.
Trade experts have warned that US trade deals under the second Trump administration are one-sided as was evident in its trade deal with the UK and that India should guard against any adverse long-term commitment under Trump’s pressure. Experts have also stressed that several of Trump’s tariffs and trade maneuverings are not WTO-compliant.
Another area of concern is that President Trump has announced a 50 per cent duty on imports to the US for steel and aluminium from June 4, 2025 and this has not been stayed by the US court. Both steel and aluminium and their derivatives account for nearly a quarter of the country's total engineering goods shipments to the US. Even as India has downplayed the impact on domestic exporters, the industry has expressed that it will make exports costlier and thus may see a dip in the coming months. As India and US hold negotiations later this week, mitigating adverse impact of these duties would be crucial for India’s export economy especially in the engineering goods. Even the 25 per cent import tariff is considered quite challenging but increasing it to 50 per cent would pose significant challenges. The UK has managed to secure exemption from imposition of 25 per cent import duty through bilateral trade negotiations, it puts additional pressure on India to get similar exemptions.
Even as the conditions are favorable, it will not be easy to strike a deal favoring India and maintain a status quo as prior to the announcement of the reciprocal tariffs. A powerful court has given a ruling against the decision of the most powerful man on the earth. President Trump has challenged the ruling and final decision is yet to be delivered. Amid all this, India must put forward best case to strike a deal that doesn’t adversely impact its economy. According to experts, some give and take is bound to happen during the trade talks but India must protect its economy as every country does.
(Sunil Batra is an expert on trade issues)
