After Tariff Spat, India and the US Eye a Mutually Beneficial Trade Agreement

New Delhi, September 17, 2025: Ever since the US tariffs were announced, there has been widespread unrest among exporters in India, resulting in strained relations between the two countries. After much deliberation, there seems to be a ray of hope as India and the United States have resumed talks to finalise a bilateral trade agreement. In order to offer long-term stability in trade relations and address the key concerns of exporters, officials from both parties are pushing intensely for the negotiations to take place.

Tariff Tensions Stall Talks

The prime reason for the talks to have stopped is the US’s imposition of an additional 25% duty on Indian exports. These exports that are linked to Russian oil already face a burden of a 25% tariff imposed earlier. As a result, many labour-intensive sectors were impacted, mainly textiles, engineering goods, gems and jewellery, and agricultural products. In an attempt to ease pressure on its exporters, India tried its best to seek concessions in the tariff hike.

Key Issues on the Table

In the latest round of negotiations, multiple topics were touched upon, such as parity in tariffs, enhanced market access for Indian pharmaceuticals and seafood. Additionally there were the US concerns about India’s Quality Control Orders, often being flagged off as non-tariff barriers. On one hand, India is seeking relief to protect its exporters, and on the other hand the US is focusing on broader structural reforms that could provide predictability in bilateral trade.

Diverging Positions

Trade experts caution that without the rollback of the additional oil-linked duty, progress may be limited. Washington has tied these tariffs to ongoing legal proceedings, making immediate relief difficult. At the same time, India has made it clear it will not compromise on sensitive sectors like agriculture, dairy, and e-commerce, which impact millions of livelihoods. However, New Delhi has indicated willingness to lower tariffs on more than 95% of US industrial goods that do not affect its core red lines.

Leaders Signal Optimism

The talks resumed after both Prime Minister Narendra Modi and US President Donald Trump expressed confidence about reaching an early conclusion. Both leaders highlighted the strength of the bilateral partnership and signalled that continued engagement could help unlock new opportunities between the two economies.

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