US Close to Finalising Trade Deal with India Amid New Tariff Announcements

Tuesday, July 8: The United States President has indicated that a trade agreement with India is on the verge of being finalised, a statement made amidst a broader announcement regarding the imposition of new tariffs on several countries. This development signals a potential breakthrough in the protracted trade negotiations between the two nations.

Tariffs Imposed on 14 Countries

As part of the new trade measures, the US has confirmed the imposition of 25% tariffs on goods imported from Japan and South Korea, effective from August 1. Additionally, twelve other nations have received formal notifications outlining the specific duties they will be subjected to on exports to the US. These tariffs are largely “reciprocal” duties, initially announced on April 2, 2025, but were temporarily suspended for 90 days to allow for negotiations. The new August 1 deadline applies to these tariffs.

The countries and their new tariff rates include:

• Japan – 25%
• South Korea – 25%
• South Africa – 30%
• Kazakhstan – 25%
• Malaysia – 25%
• Laos – 40%
• Myanmar – 40%
• Tunisia – 25%
• Bosnia and Herzegovina – 30%
• Indonesia – 32%
• Bangladesh – 35%
• Serbia – 35%
• Cambodia – 36%
• Thailand – 36%

These tariffs are separate from any existing sectoral tariffs.

Shift from Deals to Direct Action

While some countries, such as the United Kingdom and China, have reportedly reached trade agreements with the US, others have only received letters detailing the tariffs they must now comply with. The President stated that comprehensive deals were no longer feasible with all countries, leading the administration to opt for direct imposition of duties.

“We’re sending out letters to various countries telling them how much tariffs they have to pay. Some may be adjusted depending on their circumstances. We’re not going to be unfair about it,” he said.

Warning Against Retaliation

The President also issued a warning to countries considering retaliatory tariffs. He noted that any increase in tariffs on US goods would result in a matching increase by the US.

“If for any reason you decide to raise your tariffs, then whatever the number you choose to raise them by will be added onto the 25% that we charge,” he wrote in a message to leaders of Japan and South Korea.

Implications for India

This shift in US trade strategy—from primarily pursuing traditional, comprehensive trade deals to imposing tariffs directly—could provide additional time and leverage for India to finalise its own agreement. Indian officials have been in hectic negotiations in Washington recently, aiming to secure an interim trade deal before the original July 9 tariff deadline, which has now been extended to August 1.

India had previously faced a 26% reciprocal tariff on its goods, announced in April 2025. This was later reduced to a 10% basic duty for a 90-day suspension period that began on April 10. India is seeking full exemption from this 26% tariff. It has drawn “red lines” on politically sensitive sectors such as dairy and agriculture, indicating a firm stance against opening these sectors to US imports. The US, conversely, is seeking greater market access for its industrial goods, automobiles (especially electric vehicles), petrochemicals, wines, and certain agricultural products like apples, tree nuts, and alfalfa hay. India, on its part, is pushing for lower US tariffs on its labour-intensive exports, including apparel, textiles, gems and jewellery, and leather goods.

The US remains India’s largest trading partner, with bilateral trade in goods reaching USD 131.84 billion in 2024-25. The upcoming days are expected to be crucial for determining the outcome of these high-stakes negotiations, which could have significant implications for both economies. Moody’s Ratings has suggested that India could potentially benefit from lower US duties compared to other Asia-Pacific peers, attracting greater investment flows and strengthening its position as a global manufacturing hub.

What’s Next?

India is now racing against the extended August 1 deadline to finalise a trade deal with the US and avoid reinstated 26% tariffs. Negotiators are working to balance political sensitivities (like agriculture and dairy) with the economic need to protect labour-intensive exports. A successful deal could boost India’s global trade standing, attract manufacturing investments, and offer relief amid rising global tariffs. Watch for developments over the next two weeks—any breakthrough could reshape trade dynamics in the Asia-Pacific region and deepen US-India economic ties.

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