Interim Trade Deal Between US and India: Tariffs Likely to Drop Below 20%

India and the United States are working on an interim trade agreement that could see tariffs on Indian products drop to below 20 percent. According to The Economic Times, this would give India a competitive edge over other South Asian rivals.

These discussions are being kept confidential. India hopes that their tariff rates will be announced through an official statement rather than publicly revealed on Truth Social, as per Trump's previous actions.

Potential Benefits of the Deal

This interim agreement would allow both countries to continue ongoing discussions and give India time to resolve outstanding issues before a larger deal is reached. Previously, Trump had set a 26 percent tariff for India. If this new agreement brings it below 20 percent, it will be considered a significant diplomatic success for India.

If this interim agreement is finalized, India would be among the handful of countries to successfully conclude a deal with the Trump administration. Notably, Trump recently announced tariffs ranging from 35 to 50 percent on some countries like Canada, effective August 1.

Comparison with Other Countries

The report also states that the terms of India's deal would be more favorable than Vietnam's, as Vietnamese products face a 20 percent import duty, which they are trying to reduce. Trump has only completed a full trade agreement with the United Kingdom so far.

Last week, Trump announced tariffs on products from several Asian countries:

 * Laos: 40 percent

 * Myanmar: 40 percent

 * Cambodia: 36 percent

 * Thailand: 36 percent

 * Bangladesh: 35 percent

 * Indonesia: 32 percent

 * South Korea, Japan, and Malaysia: 25 percent

Unresolved Issues and Future Plans

India has been actively engaged in trade discussions with the U.S. since the beginning of this year. However, relations between the two countries are reportedly strained recently. Trump has even threatened additional tariffs due to India's participation in the BRICS alliance. Nevertheless, an Indian delegation is expected to visit Washington soon to advance the talks.

Both sides remain firm on several key issues. One major point of contention is the U.S. demand that India open its market to genetically modified (GM) crops, which India has rejected due to concerns for its farmers' interests and food security. The U.S. is pushing for access to India's agricultural market, as current agricultural trade between the two countries is only $8 billion. The U.S. wants India to buy their corn, soybeans, and cotton, which would help reduce the $45 billion trade deficit.

Additionally, both parties have yet to reach a resolution on non-tariff barriers in the agricultural sector and regulatory processes in the pharmaceutical industry.

India and the U.S. aim to increase bilateral trade from the current $191 billion to $500 billion by 2030.