Citing high tariffs from countries such as Brazil, India and China, US President Donald Trump said his plan for reciprocal tariffs would come into effect on April 2, but Indian officials held out hope of a resolution, pointing to trade negotiations currently underway between New Delhi and Washington.
Trump’s intention to hit a range of trade partners with reciprocal tariffs, unveiled during an address to a joint session of the US Congress on Tuesday, have intensified concerns about trade wars that could hit global economic growth. Trump’s remarks came at a time when commerce minister Piyush Goyal is on a nearly week-long visit to the US for the trade negotiations.
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According to people familiar with the ongoing talks, who spoke on condition of anonymity, the Indian side may escape the tariffs that Trump has threatened to impose from April 2 as both sides are actively engaged in constructive negotiations to address each other’s concerns, including tariff and non-tariff barriers.
“An Indian delegation led by commerce minister Goyal is in the US for important meetings. The negotiations are on and we have agreed on having the first tranche of a mutually beneficial bilateral trade agreement by the fall of 2025,” one of the people said.
A second person added, “The Indian delegation will deliberate on trade matters on the lines of the joint statement finalised at the meeting between President Trump and Prime Minister Modi on February 13. This visit is part of efforts to negotiate the first tranche of the bilateral trade agreement by the fall.”
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Emerging markets, especially Asian stock exchanges, saw some signs of flexibility in the American stance after US Commerce Secretary Howard Lutnick suggested on Wednesday the Trump administration may walk back some tariffs on Mexico and Canada that sparked a global sell-off. Indian indices were among Asian stocks that closed in the green on Wednesday.
Goyal, who is in the US during March 3-8, is expected to meet several top US officials and policymakers, including trade representative Jamieson Greer and commerce secretary Lutnick. “They are expected to discuss a roadmap for the bilateral trade agreement,” a third person said.
Referring to ongoing negotiations for proposed FTAs with the European Union (EU) and the UK, the people said India is already considering the key demand of reducing tariffs on automobiles in exchange for easier mobility for professionals and other concessions.
This signifies that India’s automobile sector is competitive and it can also face competition from American automakers, provided the US reciprocates, the people said. A cut on tariffs on US autos has been among the key demands of the Trump administration.
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While addressing the joint session of the US Congress on Tuesday (Wednesday morning Indian time) Trump said he intends to impose reciprocal tariffs and non-tariff actions from April 2 that are aimed at balancing years of trade imbalances.
Though Trump didn’t specifically name India among the countries that would be hit with tariffs next month, he listed India along with Brazil, Canada, China, Mexico and the EU as the countries and regions that “charge us tremendously higher tariffs than we charge them” in his speech to Congress.
“If you don’t make your product in America…you will pay a tariff and in some cases, a rather large one. Other countries have used tariffs against us for decades and now it’s our turn to start using them against those other countries,” Trump said in what was the longest presidential speech to lawmakers on record, and the Republican leader’s first since he took office for a second time.
“It’s very unfair. India charges us auto tariffs higher than 100%. China’s average tariff on our products is twice what we charge them. And South Korea’s average tariff is four times higher,” Trump railed.
“This system is not fair to the US and never was, and so on April 2…reciprocal tariffs kick in, and whatever they tariff us, other countries, we will tariff them,” he said.
In the context of Trump’s remarks, the people noted that in 2024, the US had large trade deficits with major trade partners such as China ($295.4 billion), Mexico ($171.8 billion), Japan ($68.5 billion) and Canada ($63.3 billion). In comparison, the US trade deficit with India was $45.7 billion, they said.
According to the website of the US trade representative, America’s total trade in goods with India was estimated at $129.2 billion in 2024, including US exports to India worth $41.8 billion and imports from India worth $87.4 billion.
At their meeting in Washington on February 13, Modi and Trump agreed to deepen the bilateral trade relationship in a way that “ensures fairness, national security and job creation”. They also set a target for more than doubling two-way trade to $500 billion by 2030.
“Recognising that this level of ambition would require new, fair-trade terms, the leaders announced plans to negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025,” the joint statement said.
Besides designating senior representatives to advance these negotiations, the two sides agreed to adopt an “integrated approach to strengthen and deepen bilateral trade across the goods and services sector”, and to work on increasing market access, reducing tariff and non-tariff barriers, and deepening supply chain integration.
The Indian government’s move to hold a meeting with Trump early in his second term was seen as part of efforts to stave off potential tariffs and gain time to work out a trade deal with Washington.