Has India offered Trump zero tariffs? What we know and why it matters

United States President Donald Trump said connected Thursday that India had offered a commercialized woody that projected astir “no tariffs” connected US goods, arsenic the South Asian federation seeks to avert higher import and export costs.

India disputed Trump’s claim. But New Delhi is looking to clinch a commercialized woody with the US wrong the 90-day pause announced by Trump connected April 9, connected truthful called reciprocal tariffs for large trading partners. On May 8, the White House secured a trade statement with the United Kingdom, 2 days aft India inked a akin pact with it.

India’s equity benchmarks jumped astir 1.5 percent pursuing Trump’s comments. The Nifty 50 edged up 1.6 percent portion the BSE Sensex gained 1.48 percent, reaching their highest levels successful 7 months.

India was 1 of the archetypal countries to statesman commercialized negotiations with the US pursuing Prime Minister Narendra Modi’s sojourn to the White House successful February, with some sides agreeing to finalise a bilateral woody this year.

Last month, meanwhile, US Vice President JD Vance visited India and met with Prime Minister Narendra Modi, hailing what helium called “very bully progress” connected a commercialized statement betwixt Washington and New Delhi.

What was really said?

“It is precise hard to merchantability successful India, and they are offering america a woody wherever fundamentally they are consenting to virtually complaint america nary tariffs,” Trump said successful a meeting with executives successful the Qatari superior Doha. “They’re the highest and present they’re saying nary tariff.”

In a connection soon aft to section quality agencies, India’s Foreign Minister Subrahmanyam Jaishankar pushed backmost against Trump’s claim, saying “nothing is decided till everything is.” He added that “any judgement connected it would beryllium premature” until a “mutually beneficial” statement is reached.

Trump didn’t supply further details of New Delhi’s evident offer, and the Indian Ministry of Commerce and Industry didn’t instantly respond to media requests for comment.

What is the authorities of US-India commercialized relations?

The US is India’s largest trading partner, with bilateral commercialized totalling immoderate $129bn successful 2024. India ran a $45.7bn surplus with the US past year, chiefly successful the signifier of pharmaceutical products, electrical machinery and jewellery.

Having agelong complained that India’s tariffs were excessively precocious and wounded US businesses, Trump pledged to enforce “reciprocal” tariffs of 27 percent connected India. Those tariffs are presently connected clasp until aboriginal July.

A 10 percent basal tariff continues to use to India and galore different nations during the pause.

India’s mean tariff complaint is 17 percent, compared with 3.3 percent by the US, arsenic per a study by the Indian Council for Research connected International Economic Relations.

In caller weeks, India has made overtures to placate Trump’s nationalist disapproval, including lowering import duties connected US goods similar bourbon whiskey – down from 150 to 100 percent – and Harley-Davidson motorcycles – from 50 to 40 percent.

As portion of ongoing commercialized talks, New Delhi has besides projected zero tariffs connected car parts, connected a reciprocal ground and up to a definite amount, Bloomberg reported earlier this month.

A delegation of Indian officials is acceptable to sojourn the US aboriginal this period to effort and determination talks forward. The Reuters quality bureau reported that India’s commercialized minister, Piyush Goyal, mightiness sojourn too.

Trump’s caller comments travel days aft India threatened to enforce retaliatory tariffs linked to higher US duties connected alloy and aluminium, a motion that New Delhi is adopting a more bullish approach in its negotiations with Washington.

For now, though, commercialized talks are thought to beryllium progressing well.

What are the putative presumption of the deal?

Reuters reported that New Delhi has offered to reduce duties to zero connected 60 percent of US imports successful a archetypal signifier deal, portion besides offering preferential entree to astir 90 percent of the merchandise India imports from the US.

In theory, this would bring the mean tariff differential (the saltation successful tariff rates countries enforce connected each other) betwixt India and the US down by 9 percent points, importantly lowering commercialized barriers successful the world’s fifth-largest economy.

Preferential marketplace entree – oregon little import introduction requirements into the US compared with different countries India trades with – is being considered for cardinal goods specified arsenic jewellery, textiles and cultivation products similar bananas and grapes.

“Preferential marketplace entree for India would mean amended presumption of commercialized for these goods compared to America’s different trading partners,” an Indian authorities authoritative who preferred not to beryllium named told Reuters.

To marque the woody much charismatic for Washington, India has besides offered to easiness export regulations connected respective high-value US imports, the archetypal authoritative said. These see aircraft, electrical vehicles, aesculapian devices, and hydrocarbons.

Beyond tariffs, India has besides asked the US to dainty it connected par with different apical US allies specified arsenic the UK and Japan successful presumption of entree to captious exertion sectors similar artificial intelligence, biotech, and semiconductors.

What are immoderate obstacles to a ‘zero-tariff’ regime?

India’s anticipation of being exempt from tariffs is astatine likelihood with the woody struck betwixt the US and UK, successful which lone definite goods, based connected communal interest, had tariffs removed – arsenic opposed to across-the-board withdrawals.

Elsewhere, US Treasury Secretary Scott Bessent past week hinted that Washington mightiness beryllium looking to unafraid “purchase agreements” for circumstantial products with China, arsenic portion of ongoing commercialized negotiations with Beijing.

As such, caller commercialized deals suggest that Trump’s tariff strategy amounts to carve-outs connected peculiar goods, arsenic opposed to wide escaped commercialized agreements. Looking ahead, comments from Indian and US officials hint astatine a akin arrangement.

Domestic issues besides basal successful the mode of a escaped commercialized deal. India has agelong utilized tariffs to shield cultivation markets from inexpensive imports. Farmers person expressed fears that Modi would weaken those protections arsenic portion of a woody with Trump.

Then, astatine the geopolitical level too, India is successful a tricky position.  While Washington sees New Delhi arsenic a counterbalance to Beijing’s increasing clout, India imported $113.45bn from China past year. By contrast, it imported conscionable $40bn from the US.

What’s more, China precocious warned the UK implicit its commercialized woody with the US. It accused the UK of aligning with the US successful a determination that could compel British companies to exclude Chinese products from their proviso chains.

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