India and the United States concluded a four-day round of negotiations in New Delhi, with the Office of the US Trade Representative (USTR) proposing an additional 12.5% tariff on Indian goods during the talks. According to the commerce department, the negotiations covered trade in goods, non-tariff measures, customs and trade facilitation, economic security alignment and other areas of mutual interest. The talks were held during a visit by Assistant US Trade Representative for South and Central Asia Brendan Lynch and his team, with India represented by Darpan Jain, additional secretary in the department of commerce and the country's chief negotiator for the talks.
The latest engagement was the second round of negotiations since the two sides issued a joint statement in February agreeing on a framework for an interim agreement regarding reciprocal and mutually beneficial trade. Following February's joint statement, the White House removed the 25% penal tariff on India for its Russian oil imports and both sides had agreed to lower the reciprocal tariff on Indian goods to 18% from 25%. However, the US Supreme Court subsequently scrapped the reciprocal tariffs imposed under the US's International Emergency Economic Powers Act, leading to the US levying a temporary baseline tariff of 10% on all trading partners.
The proposed 12.5% tariff on Indian goods is part of a broader investigation under Section 301 of the US Trade Act of 1974, which allows Washington to probe and act against trade practices deemed harmful to US commerce. The duty will not take effect immediately, as Washington has invited public comments on the proposed tariff action by July 6, with hearings scheduled for July 7. The tariff proposal follows an investigation against multiple economies, including India, citing their alleged failure to stop imports made with forced labour in third countries. The proposed tariff of 12.5% is likely to be finalised by July 24, before the baseline duty expires.
Under the framework, India had proposed eliminating or reducing tariffs on all US industrial goods as well as a broad range of American food and agricultural products. These include dried distillers' grains (DDGs), red sorghum used for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, among other products. India has also indicated its intention to purchase $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years. The talks are being viewed as significant because India currently enjoys a comparative advantage over competing countries, with all US trading partners now subject to a uniform 10% tariff.
The US remained India's second-largest trading partner in 2025-26. India's exports to the US rose 0.92% to $87.3 billion during the fiscal year, while imports from the US increased 15.95% to $52.9 billion. India's trade surplus with the US stood at $34.4 billion in 2025-26, down from $40.89 billion in the previous fiscal year. US Ambassador to India Sergio Gor said at an event in Mumbai on Wednesday that almost 99% of the agreement was already in place, indicating significant progress toward a comprehensive trade deal. The negotiations are expected to continue as both sides work to finalise the interim agreement and advance negotiations under the broader Bilateral Trade Agreement.
