India-US Trade Talks Intensify Amid Fresh Tariff Threat

New Delhi: After the US Trade Representative (USTR) proposed to impose 12.5 per cent tariffs on 54 countries, including India, the ongoing trade talks between the Indian and the American officials in New Delhi to finalise the first tranche of the bilateral trade agreement intensified on Wednesday. The government said that an interim India-US trade deal may ease tariff tensions, but New Delhi will not sacrifice long-term strategic interests for short-term gains. The real goal is a balanced, durable trade framework, not just a quick fix, according to a top source.

US Ambassador Sergio Gor said on Wednesday both sides were trying to resolve the remaining “1 per cent” sticking points and expected the long-awaited pact to be inked within the next several weeks.

The talks that started on Tuesday are being held in New Delhi.

Hours after the reports of the US proposal to impose 12.5 per cent tariffs for allegedly failing to prohibit the import of goods produced with forced labour, the commerce ministry said that India remains engaged with the US on Section 301 proceedings and for finalisation of a framework agreement. The statement comes amid the ongoing negotiations between the two countries over the finalisation of the first phase of the bilateral trade agreement.

While officials from New Delhi and Washington are currently holding three-day talks to finalise the details of an interim bilateral trade agreement, the USTR on June 2 issued its findings in the forced labour investigation and proposed additional tariffs on imports from 54 economies, including India.

Reacting to the proposed 12.5 per cent tariff, the source said, “India will definitely seek relief from any tariffs arising from US Section 301 investigations during meetings with American officials this week."

“New Delhi has been pushing for dropping the section 301 probes and resolving the issue bilaterally given that the two nations are already engaged in trade negotiations. The high-stakes trade deal is nearing conclusion, and the pact could ease tariff and investor concerns soon. I think hasty deals may weaken India’s bargaining power. As of now, agriculture and digital trade remain sensitive, and an interim pact should lead to a broader FTA,” the source said.

The Office of the USTR launched two separate Section 301 investigations on March 11 and 12, covering 60 economies over concerns related to forced labour and excess industrial capacity. As per the commerce ministry, India is also parallelly engaged with the US for the finalisation of an interim trade agreement, a framework for which was announced through a joint statement on February 7.