India’s trade partnership with the United States is now facing extreme pressures as the two countries continue to argue over tariff differences. India’s popular perception is as a high-tariff country, with an average tariff rate of 17 percent compared to the average US tariff rate of 3.3 percent. This unprecedented imbalance has received a lot of public scrutiny. India currently ranks 10th among countries where the US has significant trade deficits, further complicating the current climate of aspiring trade agreement negotiations.
The US is reeling under a record $295 billion trade deficit with China. India’s trade deficit with the US is quite modest. Yet India imposes a 10 percent tariff on the very imports from America that they want duty-free access for. American tariffs on Indian liquor can reach a staggering 150 percent. This situation has prompted the Indian government to seek concessions, including recent tariff cuts on luxury goods like bourbon and high-end motorcycles, signaling a willingness to negotiate.
The Stakes of Tariff Negotiations
At the same time, the Modi government is hugely under the pump to settle longstanding tariff spats with the US. As it pushes the envelope in these discussions, the nonprofit comes under fire from all sides. Farmers especially are worried that trade deals would roll back agricultural safeguards. India’s simple average tariff rate on ag imports is 39 percent. Such a turn of events would understandably send shivers down every farmer’s spine for fear of losing hard-won protections.
Considering these dynamics, experts recommend focusing on shaping a strong agreement. To encourage India, economist Biswajit Dhar stressed that negotiators need to produce a win-win outcome. He made it unequivocal by saying, “We can’t allow Trump to win. This sentiment epitomizes the urgency with which India must push for its interests as it continues to negotiate.
Anil Trigunayat, former High Commissioner to Yemen and a former diplomat himself, supported that idea, arguing that transparency about domestic affairs is essential on both sides. He added, “It is critical to lay your cards on the table and tell people what your domestic environment looks like. Furthermore, he indicated that negotiations typically begin with maximalist positions before converging somewhere acceptable for both parties: “On an international level, we start with a maximalist position. And then they come somewhere in between.”
US Perspectives on Trade Barriers
Former President Donald Trump has taken a very public anti-barrier view. He argues these hurdles keep US companies from participating in the Indian market. He criticized India’s tariffs as being outlandishly high. He added, “It’s extremely difficult to be able to sell into India because they have huge trade barriers and very high tariffs.” He further noted that these tariffs create significant challenges for American businesses: “India charges us massive tariffs, massive, you can’t even sell anything into India. It’s almost, it’s almost restrictive. It is restrictive. We do very little business inside.
Their barbed wire, boogeymen, and walls The previous administration came to view these barriers as detrimental to American interests. They were convinced addressing this issue required taking action now. He urged India to be more accommodating in its trade practices and mentioned that India appeared willing to reduce tariffs: “They’ve agreed, by the way, they want to cut their tariffs way down now because somebody’s finally exposing them for what they’ve done.”
Domestic Implications of International Negotiations
Yet, the Indian government’s increasingly aggressive posture toward tariff conflict resolution has alarmed its farmer base. Farmers are concerned that any concessions won through negotiations would erode hard-fought protections that would leave their interests unprotected. The new agreement’s extreme agriculture import tariffs foster even greater fear. Further, there is a real and present danger of even deeper cuts to safety policies.
Jayati Ghosh, an economist, criticized the US’s approach to negotiations, suggesting it relies on coercive tactics: “The US is essentially using bullying tactics to try and extract as many concessions as possible.” She emphasized the implications that such tactics could have on India’s economy and security: “It is very bad for India’s security and economy – and it is unacceptable.”
The farmers’ dissatisfaction with the government’s approach soon became clear, through violent protests and even through speeches converting public policy. Vijoo Krishnan from the All India Kisan Sabha asserted: “Go back, Vance. India is not for sale!” This sentiment is indicative of a deeper and growing intransigence among farmers to accept perceived give and takes in trade negotiations that would threaten their livelihoods.
