India, US push for rapid trade deal under shadow of new tariffs

Just days before the US’s 26% reciprocal tariffs on Indian imports are set to take effect, External Affairs Minister S Jaishankar held a crucial conversation with US Secretary of State Marco Rubio on April 8.

The two leaders underscored the urgency of finalizing a long-pending Bilateral Trade Agreement, with both sides recognizing its strategic and economic significance.

The trade talks gained momentum following Prime Minister Narendra Modi’s visit to Washington, DC, in mid-February, where initial negotiations began with former US President Donald Trump. Now, with the new tariff regime fast approaching, India is pushing to wrap up the deal to minimize potential economic fallout.

“Good to speak with @SecRubio today,” Jaishankar posted on X. “Exchanged perspectives on the Indo-Pacific, the Indian sub-continent, Europe, Middle East/West Asia and the Caribbean… Agreed on the importance of the early conclusion of the Bilateral Trade Agreement.”

The impending tariff hike comes as part of a broader US trade recalibration. The Trump administration had announced baseline import duties of 10% on all countries, effective April 5, 2025. India, however, was additionally targeted with a 26% reciprocal tariff starting April 9. Though lower than the tariffs imposed on countries like China (34%), Vietnam (46%), Thailand (36%), and Indonesia (32%), Indian officials remain concerned about the potential impact on key sectors.

Government sources indicated that Jaishankar’s call was aimed at communicating India's concerns directly and urging a more calibrated approach. Meanwhile, India’s Ministry of Commerce and Industry is assessing the implications of the US decision. In a statement last week, the ministry confirmed ongoing engagement with stakeholders, including exporters and industry leaders, to chart a response and explore potential opportunities arising from the evolving global trade environment.

“The US President issued an executive order on reciprocal tariffs, imposing additional ad valorem duties ranging from 10 per cent to 50 per cent on imports from all trading partners,” the ministry noted. “The baseline duty of 10% took effect from April 5, with country-specific tariffs — including India’s — kicking in on April 9.”

Both nations are currently negotiating a comprehensive, multi-sectoral trade agreement. Talks are said to cover a wide array of shared interests, including supply chain resilience, investment flows, and technology transfer.

“We remain in touch with the Trump administration on these issues and expect to make progress in the coming days,” the ministry added.

As the tariff deadline looms, the emphasis from both sides is clear: time is of the essence to lock in a trade framework that can withstand global headwinds and support long-term strategic cooperation.