US President Donald Trump has signalled that India and the US are back at the negotiating table and exuded optimism on the successful conclusion of a bilateral trade deal after calling off a visit of American trade negotiators last month and giving New Delhi a cold shoulder for weeks.
Prime Minister Narendra Modi responded positively to Trump’s statement and expressed confidence that the trade negotiations will unlock “limitless potential” of the India-US partnership.
New Delhi is insistent on the entire 50 per cent of tariffs imposed by the US on Indian goods be addressed in the bilateral trade agreement (BTA) negotiations notwithstanding the fact that 25 per cent of the tariffs are linked to its purchase of Russian oil, sources told businessline.
“I am pleased to announce that India and the United States of America are continuing negotiations to address the trade barriers between our two nations. I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our great countries!” Trump posted on his social media platform Truth Social on Tuesday (early Wednesday morning in India).
Modi promptly responded to Trump’s gesture of reconciliation, the second one in the last one week, and said that he too was looking forward to speaking with the American President and work together for a brighter future.
“India and the US are close friends and natural partners. I am confident that our trade negotiations will pave the way for unlocking the limitless potential of the India-US partnership. Our teams are working to conclude these discussions at the earliest. I am also looking forward to speaking with President Trump. We will work together to secure a brighter, more prosperous future for both our people,” Modi said in a post on `X’ on Wednesday morning.
India and the US had been working on a BTA after Modi and Trump took a decision on the matter in February this year but negotiations have been rocky.
The US has been insisting that India make steep concessions not only in manufacturing items such as cars but also sensitive agricultural and dairy products including soybean and corn that are mostly of the GM variety.
After New Delhi refused to cross redlines in its sensitive areas, the US imposed 25 per cent reciprocal tariffs on most Indian goods on August 7, which was about 5-6 per cent higher than on its competitors such as Vietnam and Bangladesh.
Trump then imposed another 25 per cent tariffs on Indian products on August 27, to penalise the country for buying Russian oil, which increased total levies to 50 per cent and threatened about $60 billion of Indian exports to the country.
He also postponed the scheduled visit of a US team of negotiators to India on August 25 for the BTA talks to express unhappiness over India’s continued trade with Moscow.
“It is essential that the BTA negotiations address the entire 50 per cent tariffs levied on Indian products. It does not matter that 25 per cent is linked to India’s purchase of Russian oil and not the country’s trade barriers. It has to be addressed as part of the trade deal,” a person tracking the matter told businessline.
The US has struck deals with a few countries including Vietnam, Indonesia and Japan but has imposed reciprocal tariffs on them nonetheless, albeit at lower rates than India.
Last week Trump lashed out against India and Russia getting close to China, posting a picture of Modi and Russian President Putin with Chinese President Xi Jingping at the recent SCO Summit in China. But later he stepped back and said that India and the US had a special relationship and he was friends with Modi.
However, most of Trump’s aides have been continuously attacking India for buying Russian oil and accusing it of fuelling Russia’s war against Ukraine.
Last week, a federal appeals court ruling in Washington DC stating that most of the US’ tariffs were illegal was contested by the Trump administration which filed an appeal with the US Supreme Court against striking down of tariffs on countries including India. It warned that removing the tariffs may thrust America to the “brink of economic catastrophe”.
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