Trump threatens India with 25% tariffs as trade deal stalls
What's the story
US President Donald Trump has warned that India could be slapped with tariffs as high as 25% if a trade deal is not finalized this week. The warning comes ahead of the August 1 deadline set by the US for India and other countries to strike a trade agreement or face higher tariffs.
Tariff concerns
Trump reiterates India's high tariffs concerns
When asked about the possibility of higher tariffs on India, Trump said, "Yeah, I think so." He stressed that while India has been a "good friend," it has imposed higher tariffs than most other countries. "But now I'm in charge, and you just can't do that," he added. The US president has often criticized India's high tariffs and called it a "tariff king" and a "big abuser" of trade relations.
Ongoing discussions
No formal letter sent to India yet
Despite the tariff threats, no formal letter has been sent to India by Trump, unlike other countries where he has already set new tariff rates. The US and India have been negotiating a trade deal for months now. However, there have been mixed signals about its announcement timeline. "We continue to speak with our Indian counterparts," said US Trade Representative Jamieson Greer, adding that while a deal may be "imminent," India's protectionist trade policy is a long-standing reality.
Sticking points
Agriculture and dairy sectors major sticking points
The agriculture and dairy sectors are major sticking points in the ongoing trade negotiations. The US has long sought greater access to India's agricultural market, but India has fiercely defended it on grounds of food security and protecting small farmers' interests. Indian Commerce Minister Piyush Goyal recently said that while the agriculture sector is sensitive for India, they remain "optimistic" about striking a deal with Washington soon.
Trade dynamics
Bilateral trade reached $190 billion in 2024
The US was India's largest trading partner until recently, with bilateral trade reaching $190 billion in 2024. Trump and Indian prime minister Narendra Modi have set an ambitious target to more than double this figure to $500 billion. India has already reduced tariffs on several goods such as Bourbon whiskey and motorcycles. However, a $45 billion trade deficit remains, which Trump is keen to reduce through the ongoing negotiations.