US seeks zero tariffs on most goods.
US Proposes Zero Tariffs on Most Goods in Trade Talks with India
The United States has proposed a zero-to-zero tariff regime with India, excluding agricultural products, in ongoing trade discussions. Commerce Minister Piyush Goyal recently held talks in Washington as both nations seek to enhance economic ties.
India-US bilateral trade stood at $118.2 billion in FY24, with India maintaining a trade surplus of $36.8 billion. The proposed tariff elimination aims to boost trade volumes, reduce costs for businesses, and strengthen economic cooperation. However, agricultural goods have been excluded from the deal due to sensitivities on both sides.
The US is particularly keen on reducing tariffs on industrial and consumer goods, which could benefit American exporters and Indian manufacturers. India, on the other hand, seeks greater market access for its pharmaceutical, textile, and IT sectors while negotiating favorable terms for domestic industries.
Meanwhile, former US President Donald Trump announced a one-month exemption for automakers from his 25% tariffs on Canada and Mexico. The exemption applies only if companies adhere to existing free trade agreements. The White House confirmed this move on Wednesday, signaling efforts to balance trade protectionism with industry interests.
The trade talks between India and the US come at a crucial time as both nations aim to deepen their economic partnership. The US remains one of India’s top trading partners, and a tariff-free regime could significantly impact industries in both countries.
While discussions are ongoing, the exclusion of agricultural goods highlights the complexities of trade negotiations. Both sides are expected to continue deliberations to finalize a framework that benefits businesses and consumers alike.
US Seeks Zero Tariffs on Most Goods in Trade Talks with India
The United States has proposed a zero-to-zero tariff regime for nearly all goods traded between India and the US, with the exception of agricultural products, according to sources familiar with the matter. The move aims to enhance economic ties between the two nations by eliminating trade barriers and fostering a more seamless exchange of goods.
Commerce Minister Piyush Goyal recently concluded high-level trade discussions in Washington, where he met with US Trade Representative (USTR) Katherine Tai and US Secretary of Commerce Gina Raimondo. These meetings marked a significant step in strengthening the economic relationship between the two countries, which has seen steady growth in recent years.
A Growing Trade Partnership
Bilateral trade between India and the US stood at $118.2 billion in the financial year 2023-24, with India enjoying a trade surplus of $36.8 billion. The proposed tariff elimination could further boost trade volumes, making Indian goods more competitive in the American market while also providing US exporters with better access to Indian consumers.
For the US, reducing tariffs on industrial and consumer goods is a key priority, as American businesses seek a level playing field in one of the world’s fastest-growing economies. Meanwhile, India is focused on securing greater market access for its pharmaceutical, textile, and IT services industries.
Agricultural Goods Remain a Sticking Point
While the idea of a zero-tariff regime has been welcomed by industry stakeholders, the exclusion of agricultural products reflects the challenges of trade negotiations. Agriculture remains a politically sensitive sector in both India and the US, with each country maintaining strong protections for domestic farmers.
India has traditionally been cautious about lowering tariffs on agricultural imports, citing concerns over food security and the livelihoods of millions of farmers. On the other hand, the US has long sought to open India’s agricultural market to American dairy and grain exports. Given these longstanding differences, agricultural products were left out of the current negotiations to ensure progress in other areas.
Next Steps in Trade Negotiations
Trade officials from both nations are expected to reconvene after assessing the outcomes of the latest discussions. While the broad framework for a zero-to-zero tariff regime has been outlined, specific details and sectoral exemptions will need further deliberation.
Industry experts believe that if successfully implemented, the agreement could pave the way for enhanced economic cooperation and even serve as a model for future trade negotiations between India and other key partners.
Beyond tariffs, both countries are also exploring collaboration in technology, clean energy, and manufacturing. India has been positioning itself as an alternative supply chain hub amid global shifts, and a deeper trade partnership with the US could further accelerate this transition.
As talks progress, the focus will remain on balancing national interests with the broader goal of strengthening economic ties. While challenges remain—especially in sectors like agriculture—both sides are optimistic about reaching a mutually beneficial agreement that supports long-term trade growth.