Trade relations between India and the United States are tense amid the looming deadline for tariffs set by President Donald Trump.
Sources told Moneycontrol, a mini-trade deal between India and the United States requires a political push from President Trump and Indian Prime Minister Narendra Modi to reach a middle- ground on outstanding issues around farm and dairy. This, after the last leg of negotiations at the level of officials, likely concluded around July 2 or 3.
“The two sides have done the talking, now it is a political call, which is what we are waiting for. And the announcement hinges on the schedules of both the heads of states,” one source said.
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A second source added that India’s chief negotiator and commerce ministry’s special secretary Rajesh Agarwal returned from the U.S. on Thursday as negotiations between the Indian team and officials from the the United States Trade Representative concluded.
The United States and India have made substantial progress toward finalizing a bilateral trade agreement aimed at deepening economic ties and addressing trade imbalances. Both countries are working on a phased deal, with the first phase focusing on tariff reductions in sectors such as industrial goods, medical devices, energy products, and select agricultural imports. India has offered to reduce tariffs on over $23 billion of U.S. exports—about 55% of total American exports to India—including products like nuts, automobiles, and liquefied natural gas.
Meanwhile, the U.S. has temporarily suspended its higher 26–27% tariffs on Indian goods, originally scheduled for full enforcement, to facilitate negotiations and avoid further escalation of trade tensions.
However, several sticking points remain, especially regarding agricultural products. India is cautious about lowering tariffs on sensitive items such as dairy, wheat, and corn, and has concerns about genetically modified crops, which complicates talks. The U.S. is pushing for greater market access and stronger intellectual property protections.
Despite these challenges, both nations aim to conclude an interim trade deal by July 2025, paving the way for deeper cooperation. This agreement will not only stabilize trade relations but also set a precedent for future negotiations under the Trump administration’s more assertive trade policies.
While the Indian side is still reportedly hopeful of a trade deal before July 9, New Delhi has toughened its position on issues related to dairy and agriculture, especially genetically modified (GM) crops, as negotiations in Washington D.C. continued for a week since the Indian team arrived there on June 27.
A third source aware of the developments, but not directly involved in the talks, told Moneycontrol, “Indian officials are very frustrated. There is a deadline and US is playing very hard. They are not ready to budge on anything.”
While both sides have made progress on tariff reductions and sectoral cooperation, key issues like agriculture, dairy, and GM crops remain unresolved, reflecting deeper political and economic sensitivities. The looming deadline adds pressure for a political decision from leaders Trump and Modi to break the impasse. A successful deal could enhance bilateral trade and set a positive precedent for future agreements, but failure risks escalating tariffs and tensions.