US, India in talks on deal that may cut tariff below 20%
WASHINGTON: The US is working toward an interim trade deal with India that may reduce its proposed tariffs to below 20 per cent, people familiar with the matter said, putting the South Asian nation in a favourable position against its peers in the region.
India doesn't expect to receive a tariff demand letter - unlike many other nations this week - and anticipates the trade arrangement will be announced through a statement, the people said, asking not to be identified because the discussions are private. The interim deal would allow for continued talks, giving New Delhi space to resolve outstanding issues ahead of a broader agreement expected this fall, they said.
The statement would likely set a baseline tariff below 20 per cent - compared with 26 per cent initially proposed - with language that would allow the two sides to continue negotiating the rate as part of the final pact, the people said. The timing of an interim agreement is unclear.
If finalised, India would be on a short list of trading partners that have secured deals with the Trump administration. US President Donald Trump has otherwise shocked dozens of trading partners this week by announcing tariff rates of as high as 50 per cent in some cases ahead of an Aug. 1 deadline.
India's Ministry of Commerce and Industry didn't respond to an email seeking further information. The White House and Commerce Department also did not immediately respond to requests for comment.
The US$10.2 billion iShares MSCI India pared losses after the report of an interim trade deal.
New Delhi is seeking to secure a deal on more favourable terms than the one Trump said he signed with Vietnam, which included 20 per cent import duties. However, Vietnam was caught off guard by that rate, and is still seeking to bring it down. The UK is the only other country that Trump has announced a trade deal with.
On Thursday, Trump told NBC News he's eyeing blanket tariffs of 15 to 20 per cent on most trading partners who haven't been informed yet of their rates. The current global baseline minimum levy for nearly all US trading partners is ten per cent.
Tariff rates announced for Asian nations so far range from 20 per cent for Vietnam and the Philippines to 40 per cent for Laos and Myanmar.
India was among the first nations to approach the White House for trade talks this year, but signs of strain have emerged in recent weeks. While Trump said earlier this week that an agreement with India is close, he has also threatened additional tariffs over the country's participation in the BRICS group. A team of Indian negotiators is expected to visit Washington soon to advance the talks.
India has already put forward its best offer to the Trump administration, making clear the red lines it won't cross in finalising an agreement, Bloomberg News previously reported.
Both sides have dug in their heels over a few key issues including Washington's demand that India open its market to genetically modified crops - an ask New Delhi has rejected, citing risks to its farmers.
The two nations are yet to find a landing zone on contentious issues, including non-tariff barriers in agriculture and regulatory processes in the pharmaceutical industry, people familiar with the matter said. - Bloomberg
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