India-US trade deal enters final stretch
US Trade Representative Jamieson Greer and Commerce and Industry Minister Piyush Goyal will hold two-day talks this week on the first phase of the bilateral trade agreement. “For the US trade deal talks, tomorrow my counterpart is coming to Delhi,” Goyal told reporters in Mumbai. The meeting followed chief negotiator-level discussions on the pact held earlier this month (June 2-4) here in the national capital.
Commerce Secretary Rajesh Agrawal has recently stated that the discussions between the two ministers are expected to be centred around giving final touches to the framework deal. On June 5, Goyal said India and the US are moving towards closing all the open ends of the interim trade agreement, and both sides are likely to execute the “very, very vibrant” first phase of the BTA by the middle of next month.
The 10 percent temporary tariff imposed by the US on all its trading partners on February 24, 2026, for 150 days will expire on July 24. After that, the MFN (most favoured nation) tariffs will come into force on goods imported by the US. The temporary tariff is levied over and above the MFN duty. So before July 24, the US has to put in place a new tariff regime.
For that, the US is conducting two Section 301 investigations against a number of countries, including India. This is the only legal mechanism through which the US can impose new tariffs of any magnitude.
In March, the US Trade Representative (USTR) launched two unilateral Section 301 of the Trade Act of 1974 investigations against a number of countries, including India, over excess capacity and failures to eradicate forced labour in global supply chains.
On February 20, the US Supreme Court ruled against US President Donald Trump‘s sweeping reciprocal tariffs, which were imposed under the 1977 International Emergency Economic Powers Act (IEEPA). India was facing a 50 per cent tariff. Because of the ruling, the US has to replace the sweeping reciprocal tariffs with temporary duties. So, Trump announced 10 percent tariffs on all countries for 150 days, starting February 24.
On February 7, India and the US issued a joint statement finalising the contours or framework of the first phase of the BTA or an interim trade deal. According to that framework, the US had agreed to reduce tariffs on India to 18 percent from 50 percent. It had removed the 25 percent tariffs on Indian goods for buying Russian oil and was to cut the remaining 25 percent to 18 percent under the pact. But the US Supreme Court ruled against these tariffs. As the tariff landscape changed in the US, both sides are re-examining the agreement’s framework.
New Delhi has also expressed its intentions to purchase USD 500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. When the framework of the first phase of the bilateral trade agreement (BTA) was finalised, India had a comparative advantage over its competitor countries, such as ASEAN nations (Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei, Vietnam, Laos, Myanmar, Cambodia), Sri Lanka, Pakistan, and Bangladesh.
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