Trump hints at 20-25 pc tariff for India if no trade deal by Aug 1
US President, however, cautions that the rates are not final as both countries are still negotiating terms of an interim deal
As the August 1 deadline for India and the US to seal an interim trade deal draws near, US President Donald Trump has hinted that he may impose a tariff of 20 to 25 per cent on New Delhi if talks fall through, Bloomberg has reported.
Trump, however, said that a final tariff rate hasn’t been decided yet as the two countries are still negotiating the deal.
'India a good friend but…'
“India has been a good friend, but India has charged basically more tariffs than almost any other country,” the US President reportedly told reporters on Tuesday (July 29) aboard Air Force One.
From August 1, reciprocal tariffs imposed by the US on several countries, which were on hold since April, will take effect.
Also read: Why India should be wary of Trump's trade deals with EU, other nations
On April 2 this year, Trump announced high reciprocal tariffs. The implementation of high tariffs was immediately suspended for 90 days till July 9 and later until August 1, as America is negotiating trade deals with various countries.
Interim deal prospects bleak
The prospects for an interim deal may look dim as US Trade Representative Jamieson Greer has said that more negotiations will be needed with India on a trade pact. However, officials are not ruling out the possibility of a last-minute breakthrough.
"We continue to speak with our Indian counterparts, we've always had very constructive discussions with them," Greer told CNBC on Monday (July 28).
An US team is also slated to visit India on August 25 for the next round of negotiations for the proposed bilateral trade agreement between the two countries, an official said on Tuesday.
Though the team is coming at the end of next month, both sides remain engaged to iron out differences for an interim trade deal before August 1.
"The US team is visiting for the sixth round of talks," the official told PTI.
Also read: How India is dismantling its protectionism with UK FTA | Big picture, finer points
Fifth round of talks
India and the US teams concluded the fifth round of talks for the agreement last week in Washington.
India's chief negotiator and special secretary in the Department of Commerce Rajesh Agrawal and Assistant US Trade Representative for South and Central Asia Brendan Lynch held the deliberations.
India has hardened its position on the US demand for duty concessions on agricultural and dairy products. New Delhi has, so far, not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector.
Certain farmers' associations have urged the government not to include any issues related to agriculture in the trade pact.
India firm on trade terms
India is seeking the removal of this additional tariff (26 per cent). It is also looking at the easing of tariffs on steel and aluminium (50 per cent) and the auto sector (25 per cent). These issues are an important part of the trade pact negotiations.
Against these, India has reserved its right under the WTO (World Trade Organisation) norms to impose retaliatory duties.
Also read: Why America's trading partners should wait for Trump to chicken out
The country is also seeking duty concessions for labour-intensive sectors, such as textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas, in the proposed trade pact.
On the other hand, the US wants duty concessions on certain industrial goods, automobiles, especially electric vehicles, wines, petrochemical products, agri goods, dairy items, apples, tree nuts, and genetically modified crops.