US President Donald Trump has warned that India could face tariffs as high as 25% if the two countries fail to finalise a trade agreement by August 1.
“Yeah, I think so,” Trump told reporters on Tuesday when asked if India would face higher tariffs without a deal. “India has been a good friend, but India has charged basically more tariffs than almost any other country. But now I’m in charge, and you just can’t do that.”
The US has issued the same warning to several other countries, setting a firm deadline of August 1 to reach trade deals or face increased import taxes.
India and the US have been negotiating a potential agreement for months, with both sides alternating between optimistic and cautious tones. A final deal remains elusive, even as the deadline looms.
Washington has long accused India of protectionist policies and high tariffs, with Trump previously branding the country a “tariff king” and a “big abuser” of trade ties.
Although Trump has not yet issued a formal tariff notice to India unlike over a dozen other trading partners his administration has signalled that tariffs could be imposed swiftly if talks fail.
Back in April, Trump announced tariffs of up to 27% on Indian goods, but that move was temporarily paused to allow negotiations to continue.
Speaking earlier this week, US Trade Representative Jamieson Greer said, “We continue to speak with our Indian counterparts. We’ve always had very constructive discussions with them.”
Greer acknowledged that although a deal once seemed “imminent,” progress has been hindered by India’s longstanding protectionist stance.
“Their trade policy has been premised on strongly protecting their domestic market,” he noted, adding that Trump is focused on agreements that open foreign markets more substantially to US exports.
One of the major sticking points is agriculture. The U.S. sees India’s farm sector as a valuable but underutilized export market. However, India has repeatedly defended its agricultural protections, citing concerns about food security and the livelihoods of millions of small-scale farmers.
Indian Commerce Minister Piyush Goyal reaffirmed that position last week, telling CNBC, “The agriculture sector is sensitive for India,” and assuring that the government would ensure farmers’ interests are “well protected.”
Despite the tensions, Goyal has expressed cautious optimism. Speaking, he said India was making “fantastic progress” in trade talks and hoped to “conclude a very consequential partnership” with Washington soon.
Until recently, the US was India’s largest trading partner, with bilateral trade reaching $190 billion in 2024. Both Trump and Indian Prime Minister Narendra Modi have previously set a joint goal of increasing that figure to $500 billion.
India has already made tariff concessions on a number of US goods including motorcycles and Bourbon whiskey but the US continues to run a $45 billion trade deficit with India, something Trump has repeatedly vowed to reduce.
As the deadline approaches, all eyes are on Washington and Delhi to see whether the long-awaited agreement will materialise or if a new round of trade tensions is about to begin.
Erizia Rubyjeana
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