India Likely to Attract Lower US Tariff

Strategic Insights -

The negotiations between the US and India for an interim trade deal appear to be moving forward, with the Trump administration considering imposing a tariff of less than 20 per cent on India. This would put India favourably against Bangladesh, Sri Lanka, and other competing economies. The Indian government is optimistic about securing a deal on more favourable terms than the one reached with Vietnam, which included 20 per cent import duties.

Key Takeaways:

  • The Trump administration is likely to impose a tariff of less than 20 per cent on India, lower than the 26 per cent proposed initially.
  • India's top trade negotiator Rajesh Agarwal is scheduled to meet with the US officials in Washington next week to discuss the interim trade deal.
  • The interim deal would allow for continued talks, giving India space to resolve outstanding issues ahead of a broader agreement expected this fall.
  • India is seeking to secure a deal on more favourable terms than the one reached with Vietnam, which included 20 per cent import duties.
  • The Modi government has refused to open up the agriculture and dairy sector, which are politically sensitive.
  • The two nations have yet to find a landing zone on contentious issues, including non-tariff barriers in agriculture and regulatory processes in the pharmaceutical industry.
  • The Trump administration has threatened additional tariffs over India's participation in the BRICS summit in Brazil last week.

Statistics:

  • 20 per cent: Proposed tariff on Vietnam, which India is seeking to match or better.
  • 26 per cent: Initial proposed tariff on India, which has been kept in abeyance till August 1.
  • 50 per cent: Proposed tariff on the European Union and Mexico by the Trump administration.
  • 30 per cent: Proposed tariff on the European Union and Mexico by the Trump administration.

Sources:

  • Bloomberg, "Trump May Offer India Lower Tariffs Than Laptop Makers of Vietnam," 31 July 2025.
  • ABR Private Limited, "India Likely to Attract Lower US Tariff, Bloomberg Reports," 31 July 2025.