US trade deal down to the wire as tariff pause nears close

Mint

13 hours ago

New Delhi: With just 48 hours left for 90-day pause on US reciprocal tariffs to end, the much-anticipated bilateral trade agreement (BTA) between India and the US has reached a critical stage.
According to two officials in the Indian commerce ministry and one in Washington, the agreement is unlikely to be finalized without direct political intervention to resolve some of the remaining sticky issues.
'It's down to the wire. Unless there's political direction, the deal may not go through in time," said the first of the two Indian representatives cited above.
'If all goes well, the deal will be announced before the 9 July deadline," the person added.
Indian negotiators, however, are also closely watching recent remarks by the US Treasury Secretary Scott Bessent, and believe there may still be space to work things out. If the BTA is not signed by 9 July, they expect the deadline could be extended to 1 August. Until then, President Trump's letter announcing reciprocal tariffs on countries seen as unfair traders may remain on hold.
The deal is currently on President Trump's desk for final approval, after the US Trade Representative (USTR) cleared the negotiated terms. But Indian officials remain cautious. 'The approval of the negotiation terms by the USTR is not the final step, as the deal must ultimately be cleared by President Trump. In Vietnam's case, even after the USTR gave its approval, the terms were later changed by the President," said the second Indian representative, requesting anonymity.
Queries sent to the Indian commerce ministry, spokespersons of the US Embassy in New Delhi, the USTR and US commerce department remained unanswered.
'The Indian negotiators have put forward certain conditions for the deal, particularly on sensitive issues such as agriculture, dairy, and genetically modified seeds. These conditions are restrictive in nature and may prevent American agricultural goods from being exported to India," said the person from Washington, cited earlier.
However, according to the second Indian representative, the deal may be announced by leaving out some Indian products with significant export interest, and the same could apply to certain US goods. 'These issues may be taken up in later phases of the discussions."
India's key export interests to the US include sectors such as engineering goods, electronic items, drugs and pharmaceuticals, textiles, gems and jewellery. Key US export interests to India include agricultural products such as almonds, dairy, and genetically modified (GM) seeds; medical devices; ICT goods; and energy exports such as LNG and crude oil.
The US also seeks greater access for defence equipment, automobiles, and digital services, while pushing for fewer restrictions on data flows and e-commerce.
'India is looking favourably at the trade deal, as it will provide certainty to our exports," said Ajay Sahai, director-general, Federation of Indian Export Organisations.
As earlier reported by Mint, the US has proposed two alternatives for tariff reduction in case the White House does not 'fully agree" with the terms finalized by Indian negotiators and their American counterparts. Under the proposal, a 10% additional base tariff would apply if India agrees to the US terms, and 20% if it does not—effectively offering India a relief of 6% from the current 26% reciprocal tariff.
Recently, Union commerce minister Piyush Goyal said that India never enters into trade deals based on deadlines or time pressure. 'A deal is accepted only when it is fully matured, well-negotiated, and in the national interest," Goyal said.
'It should be a win-win agreement, and only when it is mutually beneficial. India's interests must be safeguarded. National interest will always be supreme. Keeping that in mind, if a good deal is formed, India is always ready to engage with developed countries," he told reporters on the sidelines of an event.
Meanwhile, Union agriculture minister Shivraj Singh Chouhan on Monday said a trade deal with the US would be signed keeping the interest of Indian farmers at the forefront. Agriculture, especially genetically modified (GM) crops such as soyabean and maize, and dairy have emerged as contentious issues in trade deal with the US.
According to commerce ministry data, Indian goods exports to the US in the last financial year (FY25) increased by 11.6%, from $77.52 billion in FY24 to $86.51 billion in FY25. Imports from the US also rose, but by a smaller margin of 7.42%, increasing from $42.20 billion to $45.33 billion during the fiscal year that ended on 31 March.
Meanwhile, imports of goods from China rose by 11.5%, from $101.74 billion in FY24 to $113.46 billion in FY25, while exports to China decreased by 14.5%, from $16.67 billion in FY24 to $14.25 billion in FY25, the data showed.