TMTPOST -- U.S. President Donald Trump is issuing a new threat of high tariffs as India is said to seek a broader trade deal past August 1, Trump』s self-imposed deadline for negotiations.
Credit：Xinhua News Agency
Trump on Tuesday threatened his administration would raise tariffs on Indian imports up to 25% if the nation fails to reach a trade deal with the U.S. 「They are going to pay 25%,」 Trump said. When asked by a reporter if India would pay tariffs of 20% to 25%, Trump said, 「Yeah, I think so. India has been – they』re my friends.」
India is bracing itself for higher U.S. tariffs, which will likely be between 20%-25% on some exports, as temporary measure, since it holds off on fresh concessions by August 1 and eyes broader trade deal past the deadline, Reuters cited Indian government officials earlier Tuesday.
New Delhi reportedly plans to resume broader trade negotiations when a U.S. delegation visits in mid-August, with the goal of finalizing a comprehensive bilateral agreement by September or October.
India was one of the first trading partners that start negotiating with the Trump administration. Trump and his cabinet members had repeated they would make a deal with India soon, but the five rounds of talks so far have still failed to remove all the hurdles.
Bloomberg on July 11 reported the U.S. and India are working toward interim trade agreement that could see US tariffs on goods from India dip below 20%. That tariff level, if achieved, would be lower than the 26% Trump proposed for India on April 2, thus put the Southern Asian economy in a better position than its peers in the region, such as Vietnam.
It was said that the trade arrangement agreed by both sides will be announced through a statement, which would likely set a baseline tariff below 20% with language that would allow the two sides to continue negotiating the rate as part of the final pact. The interim agreement would reportedly give New Delhi space to resolve outstanding issues to hammer out a fuller deal by fall.
India nearly two week ago was reported to seek a trade deal at more favorable tariff rates than Trump had agreed with Indonesia and Vietnam. Bloomberg on July 17 reported New Delhi believes the U.S. doesn』t view it as a transshipment hub like Vietnam and other Southeast Asian nations, and negotiations so far suggest the tariff rate that India is facing would be better than those countries.
But Reuters last week reported hopes of an interim India-U.S. trade deal before the August 1 deadline are fading as talks stuck over tariff cuts on key agricultural and dairy products. India is rejecting to open its politically sensitive agriculture and dairy sectors, while Washington is resisting New Delhi』s demand for relief from higher sectoral tariffs, per the report.
U.S. Trade Representative Jamieson Greer』s comments on Monday also indicated India』s hopes of striking an interim deal before August 1 are fading.
Greer told CNBC "more negotiations" are needed for Washington to gauge how ambitious the Indian government is willing to be to secure a trade deal. He acknowledged he had previously suggested a deal with New Delhi might be imminent, but highlighted that India』s historic policy of strongly protecting its market meant that reducing barriers would represent a major reversal. 「We continue to speak with our Indian counterparts, we』ve always had very constructive discussions with them,」 he said.