After Announcing 26% Tariff, US President Signals Interim Deal Likely with India; Several Nations Granted More Time
New Delhi: In a significant move that could shape the global trade landscape, US President Donald Trump has extended the deadline to August 1 for countries like India to finalise trade-related agreements, postponing the imposition of heavy tariffs originally announced in April this year.
"We are close to finalising a deal with India. I think we can make compromises with some countries, but others will face tariffs," said President Trump in Washington.
Earlier, on April 2, Trump had accused various nations of imposing excessive tariffs on American products and had retaliated by announcing a 26% tariff on goods imported from India. This sparked concerns over a potential trade war. However, he later shifted strategy and allowed countries a window to negotiate new trade agreements to avoid the penalties. The initial implementation date was July 9, which has now been deferred to August 1.
India in Final Stage of Trade Talks
India has been actively negotiating with US trade representatives over the past few months. As per reliable sources, the discussions have entered the final phase, and a mini-interim agreement is expected before September-October, ahead of a more comprehensive trade deal.
The extended deadline offers breathing room to bridge remaining differences and iron out technical and tariff-related disagreements. Officials in New Delhi have signalled optimism, calling the talks “constructive and forward-looking.”
Multiple Nations Engaged in Talks
Alongside India, the United States Trade Representative (USTR) has been negotiating with several countries for 90 days. Nations that have received formal letters about the impending tariffs include:
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Bangladesh
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Bosnia and Herzegovina
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Cambodia
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Indonesia
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Japan
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Kazakhstan
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Laos
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Malaysia
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Serbia
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South Africa
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South Korea
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Thailand
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Tunisia
Trump noted that agreements have already been reached with Britain and China, and that some countries will face tariffs if no compromise is reached by the extended deadline.
What is a Trade Agreement?
A trade agreement is a formal pact between two or more countries to define how they exchange goods and services. These agreements regulate:
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Tariffs (taxes on imports and exports)
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Import quotas
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Export restrictions
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Standards and certifications
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Dispute settlement mechanisms
By minimising barriers, trade agreements aim to promote fair, balanced, and predictable international trade, fostering economic cooperation between nations.
Implications for India
Should an interim agreement be finalised before the new deadline, India could avoid the punitive 26% tariff and open up avenues for deeper economic and technological collaboration with the US. Analysts view this as an important moment in US-India bilateral trade relations, especially in sectors like pharmaceuticals, defence, electronics, and services.
However, failure to meet the deadline could result in serious economic setbacks, including higher costs for exporters and importers, and disruption in trade flows between the two democracies.
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