US May Sweeten Trade Deal With 16–18 PC Reciprocal Tariffs

Chennai: Amidst escalating tensions with China, the US is likely to sweeten the trade deal with India by lowering reciprocal tariffs to 16-18 per cent, lower than the tariffs for some of the Asian peers.

China’s tighter control over rare-earth exports and a deepening US–China trade war is forcing Washington to rethink its strategy with allies as it seeks reliable partners to build alternative supply chains.

US Treasury Secretary Scott Bessent recently said that Washington expected support from India and its allies at a time when tensions were escalating between the US and China.

Bessent said that Washington was already in touch with its allies. "We will be meeting with them this week and, you know, I expect that we will get substantial global support from the Europeans, from Indians, from the democracies in Asia", he told Fox News Business.

As part of building ties with its allies, including India, it seems the US is willing to lower the reciprocal tariffs to 16-18 per cent. “The US is likely offering 16–18 per cent tariff access — higher than the 15 per cent for the EU and Japan but below the 20 per cent for Vietnam,” said GTRI. Most of India’s Asian peers, excluding China and Myanmar, have tariffs in the range of 19-20 per cent.

However, the US has not yet made any commitment to respect India’s redlines, including agriculture, dairy, digital trade, e-commerce and intellectual property.

Further, no deal can make India competitive without the removal of penalty tariffs on Russian oil imports. According to GTRI, as the Trump administration has already mentioned India’s Russian oil imports in the court cases, it will be difficult for it to retract from the penalty tariffs till the court verdict comes.

Alternatively, if India stops its Russian imports, coming under pressure from the US, it will not go well for the government politically. Hence, there are many stalemates in the game.