The India-US trade deal remains pending after six months as India resists agro-dairy concessions, prompting Trump to impose a 25% tariff.
The United States seeks access to India’s agriculture and dairy markets, yet India remains unwilling to concede. Furthermore, India is being increasingly careful about the impact on its small and medium enterprises (MSMEs).
In the meantime, US President Donald Trump declared on Wednesday that he would implement a 25% tariff on India starting August 1, along with penalties for its purchases of weapons and oil from Russia.
Trump points to BRICS as a justification for the 25% tariff on India, labeling it a threat to the US dollar.
Donald Trump has pointed to BRICS as one of the reasons for the 25% tariff on India. During a press conference at the White House on Wednesday, Trump stated that BRICS is a coalition of countries antagonistic toward the US, and India’s inclusion in it raises concerns for the United States.
Regarding the potential for a trade agreement with India, Trump remarked, “We are still in discussions. BRICS is one aspect of the situation. It consists of nations that are opposed to the United States. Their objective is to undermine the dollar, and we will not permit that.”
He continued, “This tariff is motivated partly by BRICS and partly by the trade deficit. We face a significant deficit with India. Prime Minister Modi is a friend of mine, but India does not engage in substantial trade with us. Their tariffs rank among the highest globally. However, they are now willing to make notable reductions.”
Trump had previously indicated that the BRICS group—comprising Brazil, Russia, India, China, and South Africa—aims to diminish the US dollar’s global supremacy. He also cautioned that any movement in that direction could result in a 10% tariff on all BRICS member states.
Disparities in the agriculture and dairy sectors
The United States desires that India open its market to American agriculture and dairy goods while lowering tariffs. However, India has designated these sectors as red lines. A decision in this matter could adversely affect Indian farmers, rural employment, and food security.
India also harbors significant reservations regarding US dairy products. In the United States, dairy cows are sometimes fed non-vegetarian materials, such as blood meal, which conflicts with Indian cultural and religious practices.
Disagreement over Trump’s tariff policies
On April 2, 2025, the US declared a 26% reciprocal tariff on numerous countries, including India. This was suspended until July 9. India contests this additional tariff and is requesting exemptions from existing US tariffs on steel, aluminum, and auto components.
Simultaneously, the US wishes to maintain a base tariff of 10% and is urging India to eliminate tariffs in specific sectors. In response to US concerns, India has already lowered tariffs on various American products in its budget.
India seeks greater access to the American market
Previously, India and the US were negotiating a mini trade deal aimed for completion by July 8, 2025. However, both parties are now pursuing a larger trade agreement, which has complicated matters.
India is striving for improved access to the US market for its textile, jewelry, leather, and plastic products. Conversely, the US is requesting that India reduce non-tariff barriers. So far, an agreement has yet to be reached between the two nations.
Trump: India set to grant duty-free entry for American products shortly
On July 17, US President Donald Trump announced that American goods would soon receive duty-free entry into Indian markets, following a model akin to Indonesia’s. “We’ve negotiated agreements with several nations. Another one could materialize soon—with India. We’re in discussions. Once I send out the letter, the agreement will be finalized,” he stated.
Previously, on July 15, Trump enacted a 19% tariff on Indonesian imports to the US, effective August 1. However, under the same arrangement, American products will not incur tariffs in Indonesia.
