Trump hints at Indonesia-style trade pact with India; experts warn of one-sided terms
Under the US-Indonesia trade pact, the Southeast Asian nation will provide complete access to its market to US products, while Indonesian goods would attract a 19 per cent duty in America.
Explore courses from Top Institutes in
Select a Course Category
Artificial Intelligence
Degree
Project Management
Cybersecurity
Data Science
MCA
PGDM
Technology
Public Policy
others
Data Analytics
Healthcare
Others
MBA
Digital Marketing
Operations Management
Product Management
Leadership
Design Thinking
Data Science
healthcare
Management
CXO
Finance
Skills you'll gain:
Duration:
7 Months
S P Jain Institute of Management and Research
CERT-SPJIMR Exec Cert Prog in AI for Biz India
Starts on
undefined
Get Details
In addition, Indonesia has committed to purchasing USD 15 billion in US energy, USD 4.5 billion in American Agricultural Products, and 50 Boeing jets.
Later, while talking to reporters, Trump said: "India is basically working along that same line. We are going to have access into India. You have to understand, we had no access to any of these countries. Our people couldn't go in, and now we are getting access because of what we are doing with the tariffs…'
The Indian team is in Washington for the fifth round of negotiations for the proposed
bilateral trade agreement
(BTA).
Live Events
Commenting on Trump's remarks, economic think tank GTRI said if India were to accept such a "lopsided" arrangement, it could expose its domestic sectors, especially dairy and agriculture, to duty-free US goods while gaining little in return.
"A bad deal, especially one that removes India's tariffs without reciprocal benefits, could be worse than no deal at all," GTRI Founder Ajay Srivastava said, adding India must therefore negotiate transparently, guard against one-sided outcomes, and not succumb to pressure for quick, symbolic agreements that compromise long-term economic interests.
The visit of Indian commerce ministry team to Washington is important as both sides have to iron out issues in sectors, like agriculture and automobiles.
It is also important as the US has further postponed the imposition of additional tariffs on several countries, including India, until August 1.
India has hardened its position on the US demand for duty concessions on agri and dairy products. New Delhi has, so far, not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector.
India is seeking the removal of this additional tariff (26 per cent). It is also seeking the easing of tariffs on steel and aluminium (50 per cent) and the auto (25 per cent) sectors. Against these, India has reserved its right under the WTO (World Trade Organization) norms to impose retaliatory duties.
US President Donald Trump announced heavy tariffs on a number of countries, including India, on April 2. However, the imposition was postponed for 90 days until July 9 and later to August 1.
The US wants duty concessions on certain industrial goods, automobiles, especially electric vehicles, wines, petrochemical products, and agri goods, like dairy items, apples, tree nuts, and genetically modified crops.
On the other hand, India is seeking duty concessions for labour-intensive sectors, such as textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas in the proposed trade pact.
The two countries are looking to conclude talks for the first tranche of the proposed bilateral trade agreement (BTA) by fall (September-October) this year. Before that, they are looking for an interim trade pact.
India's merchandise exports to the US rose 21.78 per cent to USD 17.25 billion in April-May this fiscal year, while imports rose 25.8 per cent to USD 8.87 billion.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
22 minutes ago
- Mint
Greed and Fear Report: ‘TACO' Trade in trouble? Jefferies' Chris Wood warns of looming macro risks
Christopher Wood, Global Head of Equity Strategy at Jefferies, has raised a fresh red flag for global equity investors. In his latest Greed & Fear note, Wood questioned the durability of the so-called 'TACO trade'—a long-standing investor belief that U.S. President Donald Trump, though often aggressive in trade rhetoric, will ultimately step back from imposing tariffs. With global markets riding high on artificial intelligence (AI)-driven capital expenditure optimism, Wood warned that investors may be dangerously underestimating the macroeconomic damage tariff wars could bring. The 'TACO trade'—short for 'Trump Always Chickens Out'—is a strategy that gained traction among investors during earlier phases of Trump's presidency. It hinges on the assumption that Trump will frequently threaten tariffs to gain leverage but ultimately refrain from enforcing them due to political or market pressures. Since May 2025, this logic has underpinned a major equity market rally, as the S&P 500 and Nasdaq have scaled record highs despite repeated threats of new trade barriers. Wood, however, suggests this narrative may be losing credibility. The belief that Trump will always retreat before causing real damage may no longer hold water, especially as the former president signals readiness to double down on protectionist policies in his re-election campaign. In the meantime, the market has grown over-reliant on AI-driven optimism and is discounting the threat posed by trade frictions. According to Wood, the most dangerous development is not necessarily Trump's tariff threats themselves—but the market's willful ignorance of their long-term implications. Investors, he wrote, are effectively treating tariff threats like tradable events: they sell on the threat, buy on the pullback, and assume status quo will prevail. This has created a false sense of security. 'It's only a matter of time before macro data begins to reflect the damage,' he warned. Wood pointed to persistent trade tensions with countries like Brazil and Canada as examples of policy instability that investors have brushed off too easily. Even if these threats are eventually rolled back, the uncertainty they introduce could weigh heavily on corporate earnings, global supply chains, and consumer confidence. Supporting this view, macro research firm TS Lombard recently echoed similar concerns, noting that the volatility introduced by these policy announcements creates 'perceived but unacknowledged' fragility in global markets. A key risk, Wood noted, is that markets have become so numb to tariff rhetoric that any future implementation of aggressive trade policy may have an outsized negative impact. Ben Inker of GMO added that this market complacency could actually embolden Trump to carry through with his tariff plans—since he no longer fears triggering market meltdowns. The result: a vicious cycle where underreaction begets overreach. The numbers are already concerning. As per The Wall Street Journal, U.S. tariff rates have reached an average of 13.4 percent—levels not seen since the 1940s. These effectively function as a tax on imports and can erode consumer purchasing power, compress margins for U.S. companies, and spark retaliatory moves from trade partners. Combined with historically high equity valuations and the dominance of passive investing strategies, this macro exposure could leave markets particularly vulnerable to a correction if sentiment suddenly sours. Wood's analysis goes beyond the U.S. and touches on broader trade policy trends. Tensions with Brazil, Canada, and the EU, coupled with Trump's penchant for invoking emergency powers, create a geopolitical backdrop that's anything but stable. He also warned of currency volatility, particularly the potential weakening of the U.S. dollar, which has historically served as a barometer of risk sentiment. In response, Wood recommended that investors begin recalibrating their strategies. One suggestion is to reduce reliance on U.S. equities and explore opportunities in international markets—particularly Europe, China, and select emerging economies that stand to benefit from supply chain rebalancing and reduced exposure to U.S. policy volatility. Christopher Wood's latest commentary signals that the era of the 'TACO trade' may be coming to an end. While it served as a psychological and tactical cushion for investors navigating trade uncertainty, the assumption that threats never translate into lasting damage may no longer be viable. With tariff levels rising, global policy becoming more erratic, and market valuations stretched, Wood believes the risks are now too significant to ignore. If his warning proves accurate, the global equity landscape could be on the cusp of a reset—one where investor psychology must adjust to a world in which political shocks are not always cushioned by last-minute reversals. Instead, preparation, diversification, and a sharper focus on macro fundamentals may be the best path forward. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Economic Times
22 minutes ago
- Economic Times
Rupee falls for 2nd straight week as dollar perks up, outflows weigh
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in Markets 1. Rupee dips past key support, exporter activity and inflows help limit losses The Indian rupee weakened slightly on Friday, falling for a second consecutive week, as the dollar recovered from a more than two-year low and outflows pressured local rupee closed at 86.1475, down from its previous close of 86.0750, and 0.4% lower from a week benchmark equity index the Nifty 50, fell 0.7% this week, even as MSCI's gauge of regional stocks excluding Japan was 0.8% the near-term, the rupee is "likely to hover closer to 86.50 than 85.50," a trader at a large private bank dollar demand and equity outflows weighed on the Indian currency on the day, the trader investors have net sold about $300 million of Indian equities over July so far after infusing $1.7 billion in the previous dollar index was on course for its second consecutive weekly rise, boosted by strong U.S. economic data which diminished wagers on rate cuts by the Federal Reserve. Interest rate futures markets are currently pricing in about 45 basis points of Fed rate cuts for the remainder of the year, down from closer to 50 basis points at the start of the week."We expect the residual 14bp priced in for September to be gradually reduced," ING said in a "hawkish rethink" in Fed rate cut expectations could hurt the euro while an election in Japan over the weekend runs the risk of driving the yen below 150, ING Fed is scheduled to hold a total of four meetings over the rest of 2025, including one on July euro and the yen were on course for weekly declines of 0.5% and 0.8%, in U.S.-India trade negotiations will be in focus ahead of the August 1 deadline for country-specific tariffs on exports to the United States.
&w=3840&q=100)
Business Standard
25 minutes ago
- Business Standard
NITI Aayog recommends easing investment rules for Chinese companies
The Indian government's top think tank has proposed easing rules that de facto require extra scrutiny for investments by Chinese companies, arguing that the rules have meant delays for some sizeable deals, three government sources said. Currently, all investment by Chinese entities in Indian companies need to gain a security clearance from both India's home and foreign ministries. The think tank, NITI Aayog, has proposed that Chinese companies can take a stake of up to 24% in an Indian company without any approval being required, said the sources who were not authorised to speak to media and declined to be identified. The proposal, reported for the first time by Reuters, is part of a plan to boost foreign direct investment in India and is being studied by the trade ministry's industries department, the finance and foreign ministries, as well as Prime Minister Narendra Modi's office, the sources said. And while not all of NITI Aayog's ideas are necessarily taken up by the government, the proposal comes at a time when India and China are seeking to mend ties that have been particularly strained since border clashes in 2020. Any decision to ease might be months away and will be taken by political leaders, two of the sources said. They added that the industries department is in favour of easing, but the other government bodies are yet to give their final view. NITI Aayog, the ministries, the industries department and the prime minister's office did not reply to Reuters requests for comment. DEALS SHELVED The rules were put in place in 2020 after border clashes, including hand-to-hand fighting between the two neighbours. They only apply to land bordering nations, which affects Chinese companies the most. By contrast, companies from other countries can freely invest in many sectors such as manufacturing and pharmaceuticals, while some sensitive sectors such as defence, banking and media have restrictions. Deals such as a 2023 plan by China's BYD to invest $1 billion in an electric car joint venture have been shelved due to the rules, sources have said. While foreign investment has slowed globally since Russia's invasion of Ukraine, the rules hampering Chinese investment in India have been seen as a significant factor behind a large drop in the South Asian country's FDI. Net foreign direct investment in India tumbled to a record low of just $353 million in the past financial year, a fraction of the $43.9 billion logged in the year ended March 2021. An easing in military tensions since October has led to more efforts by both countries to mend ties, with plans for the resumption of direct flights and India seeking a "permanent solution" to their decades-old border dispute. Indian Foreign Minister Subrahmanyam Jaishankar's made his first trip to China in five years this week, telling his counterpart that the two nations must settle tensions along their border and avoid restrictive trade measures such as China's curbs on the supply of rare earth magnets. The think tank has also recommended revamping the board that decides on foreign direct investment proposals, the sources said.
