Trump’s 90-day tariff pause ‘an interval of opportunity’: Global trade strategist

Ashley J Tellis, Tata Chair for Strategic Affairs at the Carnegie Endowment for International Peace, emphasized the need for India to broaden its vision and consider a free trade agreement with the US.

He acknowledged a significant shift in India’s trade policy in recent years.

Tellis welcomed US President Donald Trump’s decision to implement a 90-day pause on broad tariffs and reduce reciprocal tariffs to 10% for India and other nations engaged in active trade negotiations with the US.

"I think it is an interval of opportunity. It creates a space for both sides to put their minds to finding a solution that will be durable and that will allow us to then move the trade dispute to the side and focus on the other areas where there is very strong complementarity between the US and India,” he said referring to Trump's 90-day pause on tariffs on India and other nations.

“So, I'm actually quite delighted that the president has chosen to enforce a pause because it gives the markets a chance to catch up. It gives our partners a chance to figure out what they need to do next, and it offers the hope that we will actually be able to reach a resolution, especially with the most important trade partners we have,” he added.

While the US administration paused reciprocal tariffs for several countries currently engaged in trade negotiations, it increased tariffs on China to 145%.

Responding to the Global Trade Research Initiative's recommendation that India avoid a Free Trade Agreement (FTA) with the US, Tellis argued, "Well, I think India needs to expand its ambitions to really consider at some point a free trade agreement with the United States.”

“There has been a remarkable change in Indian policy in recent years on this question. When Prime Minister Modi came into office, he came into office with a little scepticism about India's previous free trade agreements,” he added.

“Now, I think India has recognised that if it is to sustain its economic growth over the long term, the larger its trading relationships with the outside world, the better it is, and the United States is among the top 3 partners that the US has in international trade,” Tellis said.

He continued, “So, to my mind, we must not be looking for ways to escape. The ambition is to have a genuine free trade agreement. Now, it will take a lot of time. It's a very difficult agreement because the relative state of development between the US and India is vast. The gaps are very vast, but we should certainly hold that out as the objective that we both want to reach."

Regarding the idea of India considering a limited "Zero-to-Zero" tariff deal on 90% of industrial goods, Tellis expressed strong support, saying, "That’s an excellent idea. In fact, I believe such agreements should be the standard between friendly nations.”

“I would like to see similar arrangements between India and Europe, as well as with the United States and East Asian partners. Given today's global supply chains, there is no reason why we should still impose tariffs on merchandise,” he said.

The Global Trade Research Initiative (GTRI) has recommended that India refrain from entering a comprehensive Free Trade Agreement (FTA) with the United States, cautioning that it may force India into unfavorable trade concessions.

Instead, GTRI suggested India explore a more limited "Zero-to-Zero" tariff agreement, akin to the model that Europe has offered to the US, covering 90% of industrial goods.

"Avoid a comprehensive FTA with the US as it would force India to make damaging concessions. It's a deal that would cost India more than it gains. Restrict to zero-for-zero deals on 90 per cent of industrial Goods. Europe has offered a similar deal to the US,” Tellis said.

The first phase of the Bilateral Trade Agreement (BTA) with the United States is anticipated to be finalized by the fall of 2025, according to a statement made by Union Commerce and Industry Minister Piyush Goyal on Sunday earlier in February.