India Claims US ‘Zero-Tariff’ Deal on the Table
India and the US are locked in intense trade negotiations, with President Donald Trump recently claiming India has offered a deal that involves nearly “zero tariffs” on US goods. India, however, has disputed this claim, stating that no final agreement has been reached.
This development comes as both countries seek to reduce trade barriers and boost bilateral relations. The US is India’s largest trading partner, with bilateral trade reaching $129 billion in 2024. However, India has long been criticized by the US for its high import tariffs, which have hurt American businesses. In response, Trump had threatened to impose “reciprocal” tariffs of 27 percent on India, although these are currently on hold until early July.
What Trump Said
In a meeting with business leaders in Doha, Qatar, Trump stated that India was offering a deal with practically no tariffs on US goods. He said, “It is very hard to sell in India, and they are offering us a deal where basically they are willing to literally charge us no tariffs. They’re the highest and now they’re saying no tariff.”
India’s Response
India’s Foreign Minister, Subrahmanyam Jaishankar, refuted Trump’s claim, saying, “Nothing is decided till everything is.” He emphasized that it would be premature to judge the situation until a mutually beneficial agreement is reached.
The State of US-India Relations
Despite the recent tensions, both countries have made efforts to improve trade relations. In recent weeks, India has lowered import duties on several US goods, such as bourbon whiskey and Harley-Davidson motorcycles. In addition, a delegation of Indian officials is expected to visit the US later this month to continue negotiations.
Potential Deal Terms
According to Reuters, India has offered to reduce duties to zero on 60 percent of US imports in the first phase of a deal. It has also proposed preferential market access for key goods, including jewelry, textiles, and agricultural products, to the US market. To sweeten the deal for the US, India has also offered to ease export regulations on high-value imports, such as aircraft, electric vehicles, and medical devices.
Obstacles to a ‘Zero-Tariff’ Regime
Reaching a comprehensive trade deal faces several hurdles. Firstly, India’s demand for exemption from tariffs on all goods may not align with the US’s strategy of securing targeted reductions. The US has recently struck deals with the UK and other countries that involve tariff reductions on specific goods, rather than across-the-board elimination. Secondly, domestic political considerations in India, particularly the concerns of farmers about cheap imports, could complicate negotiations.
Finally, India’s close economic ties with China, its biggest trading partner, could create geopolitical tensions if the US pushes for a more confrontational approach towards Beijing.
