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ByStoryAI

Jul 30, 2025

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While driving a hard tariff bargain with Trump, India shouldn’t give rivals a head start in US market. If Trump sticks to plan, Indian exports to US may be tariffed at 26% starting Friday. US, despite its grouse about Indian protectionism, wants a slice of the Indian market, which is large and growing fast thanks to a growing population. A growing India is in America’s interest as it can be a counterweight to China. Other low-cost economies like Vietnam, Indonesia and Philippines have already negotiated tariffs of 20% or less.

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While driving a hard tariff bargain with Trump, India shouldn’t give rivals a head start in US market

If Trump sticks to plan, Indian exports to US may be tariffed at 26% starting Friday. It’s the ‘reciprocal tariff’ he threatened to impose from April 9, deferred by 90 days to July 9, and by three weeks more to Aug 1. Those extensions were meant to give countries time to negotiate trade deals on better terms. While most major economies – including Japan and EU – have closed deals, US-India talks remain inconclusive, even though commerce minister Piyush Goyal claimed “fantastic progress” last week.

Does that make the 26% rate inevitable? US commerce secy Howard Lutnick has said the Aug 1 deadline is cast in stone, but Trump runs govt by fiat, and ‘policy’ to him is just an extension of his mood. Nothing stops him from deferring the India tariff, especially when talks with China look headed into extra time. Also recall that, unlike Japan, Brazil, S Africa, Thailand and some 20 other countries, India didn’t get one of Trump’s ‘tariff letters’ early this month. US, despite its grouse about Indian protectionism, wants a slice of the Indian market, which is large and growing fast thanks to a growing population. Also, a growing India is in America’s interest as it can be a counterweight to China.

But that shouldn’t breed complacency as other low-cost economies like Vietnam, Indonesia and Philippines have already negotiated tariffs of 20% or less. Goods from Japan and EU will be taxed at 15%, and unless Trump goes extra sweet on India, that might be the best we can expect. He’s already hinted at a “world tariff” of 15-20% for countries with which US doesn’t have trade deals. And if China formalises its current 30% tariff – or lower – Indian manufacturers won’t have much of an advantage in the US market.

Meanwhile, the multi-billion dollar investment commitments in Japan and EU’s trade deals show how hard it is to bargain with Trump. EU negotiators say they gave in at the last minute because the alternative was to start a trade war. Of course, some of the concessions they have made might not amount to much practically. For instance, EU’s promise to buy $750bn worth of US energy products over three years is meaningless, as US produces only about $166bn worth of these products in a year. India should also expect unreasonable demands, and skirt them tactfully.

Facebook Twitter Linkedin Email This piece appeared as an editorial opinion in the print edition of The Times of India.

Source: Timesofindia.indiatimes.com | View original article

Source: https://timesofindia.indiatimes.com/blogs/toi-editorials/sign-up/