Tariff tightrope: How Donald Trump's ceasefire claim puts Centre in a 'no-win' situation
Prime Minister Narendra Modi during a meeting with US President Donald Trump at the White House, in Washington, DC, USA. (PTI file photo)
While visiting India in late April, US vice president JD Vance announced the two sides had "officially finalised the Terms of Reference' for the negotiations on trade deal. US commerce secretary Howard Lutnick said June 3 that, "You should expect a deal between the United States and India (in the) not-too-distant future because I think we have found a place that really works for both countries.
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India was one of the first countries to begin trade negotiations with the US, launching talks in February as US President Donald Trump began to unveil his ambitious agenda to upend global trade.
But as the July 9 deadline approaches, when a 90-day suspension on additional US tariffs is set to expire, the two sides have yet to seal the deal.
Moreover, Trump has also said he does not plan to extend the 90-day pause on additional global tariffs beyond July 9, even as India's trade delegation extended its stay in Washington in a final push to iron out differences before the deadline.
Also read:
'Not planning to extend tariff pause after July 9', says Donald Trump; India's trade team extends US stay
India is seeking full exemption from the additional 26 per cent reciprocal tariff announced by the US on April 2. While the tariff was suspended for 90 days, the 10 per cent baseline tariff imposed by Washington remains in place.
A tough ask
It has proven difficult to officially ink a deal because of all the things the Trump administration is asking India to do to lower its trade barriers, while only offering to give up some of its newly-imposed tariffs, in return.
The United States is urging India to open up sectors such as agriculture, dairy, and energy, and to reduce tariffs on products like soy, wheat, corn, ethanol, and apples. Washington is also seeking market access for genetically modified (GM) crops in India.
India, however, is resisting these demands, particularly in agriculture and dairy, citing the importance of safeguarding farmers and maintaining the Minimum Support Price (MSP) mechanism.
Negotiations have at times been marked by tension, as TOI reported earlier.
At the beginning of the negotiations, the Indian government aimed to secure zero-duty access for several key export items, including textiles, leather products, pharmaceuticals, certain engineering goods, and auto parts. As TOI reported earlier that while American negotiators have shown interest in concluding the deal, they have conveyed to their Indian counterparts that the Trump administration is not in a position to offer zero tariffs immediately.
Separately, India has also sought protection from any future tariff measures once an agreement is reached.
Moreover, agriculture and dairy sectors are difficult and challenging areas for India to give duty concessions to the US. India has not opened up dairy in any of its free trade pacts signed so far.
Trump's rhetoric on ceasefire between India and Pakistan
Trump's repeated public claims about mediating peace between India and Pakistan during Operation Sindoor by threatening to "cancel all deals" have added a new layer of complexity to the already delicate trade negotiations between Washington and New Delhi.
While trade officials from both sides have been working toward a deal since February, Trump's comments have stirred political unease in the country, as any suggestion of third-party involvement in India-Pakistan relations is considered a non-starter.
The government has consistently maintained that there is "complete political consensus' against external mediation on Pakistan-related matters. Prime Minister Narendra Modi reinforced this position directly to Trump in a recent phone call.
"PM Modi told President Trump clearly that during this period, there was no talk at any stage on subjects like India-US trade deal or US mediation between India and Pakistan," foreign secretary Vikram Misri said in a statement following the call between the two leaders.
"Prime Minister Modi emphasized that India has not accepted mediation in the past and never will," Misri added.
Despite this, Trump has continued to take public credit for what he has framed as brokering a ceasefire between India and Pakistan.
He repeated the claim at the Nato summit in the Netherlands and during other public appearances.
This dissonance has made it politically harder for the Modi government to move forward with a trade deal that was supposed to showcase progress in India-US ties.
"Nothing riles Indians more than the idea that their government was bullied by a foreign leader,' Syed Akbaruddin, India's former ambassador to the United Nations was quoted as saying by the Politico.
"A trade bargain that could have been a win-win deal now risks being portrayed by those who oppose it as a tribute, not a partnership.'
"Trump's comments have injected mistrust and public skepticism of US support to India,' said Akbaruddin. "The more he repeats his claim, the more a prospective US-India trade agreement smells like coercion, not cooperation."
In effect, the ongoing trade talks have placed the government in a delicate position.
If a deal is not finalised by the July 8 deadline, India could face fresh tariff hikes from the US. But if an agreement is reached, the government risks facing criticism at home for appearing to bow to American pressure.
"Whatever the current government does, it will be seen as they basically capitulated to President Trump's demand,' Mukesh Aghi, president and CEO of the US-India Strategic Partnership Forum was quoted as saying by the Politico. "So they are in a no-win situation."
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