Bigger Trade Shake-Up: Donald Trump Signals Potential US–India Deal Amid Tariff Dispute and Market Access Tensions

The remarks come at a time when a US delegation has recently held multiple rounds of discussions with officials of the Government of India in New Delhi. Both sides are actively working toward a temporary trade agreement aimed at resolving long-standing trade issues in a time-bound manner. The Ministry of Commerce in India has stated that the discussions have been constructive and that both countries are seeking an arrangement that ensures mutual benefit, with continued efforts underway to advance the proposed agreement.

Amid ongoing negotiations, a new complication has emerged. The United States has proposed additional import tariffs on certain countries, stating that they have not taken sufficient measures to curb forced labour-related concerns. India has also been included in this proposed list. If implemented, the measure could result in an additional 12.5 percent tariff on Indian goods entering the US market, potentially increasing prices of Indian products in the American market and affecting exporters.

The Government of India has clarified that no final decision has been made regarding these additional tariffs. The United States is currently seeking public and stakeholder feedback on the proposal before arriving at a final decision.

Meanwhile, the framework for an interim trade agreement between India and the United States was agreed upon in February 2026, intended to address long-pending trade issues. However, complications arose after the Supreme Court ruled certain tariffs imposed under the Trump administration as unlawful, creating uncertainty over which tariffs would remain in effect. This legal ambiguity has also impacted progress on the broader trade agreement, which remains incomplete.

India is seeking reductions in additional tariffs imposed by the United States on textiles, gems and jewellery, engineering goods, pharmaceuticals, and agricultural products. In contrast, the United States is pushing for greater access for its agricultural produce, dairy products, alcoholic beverages, medical devices, and digital companies in the Indian market.

Agriculture remains the most contentious issue in the negotiations. The United States is demanding increased access for its corn, soybeans, almonds, apples, and other agricultural products in India. However, India has expressed concerns that such concessions could adversely affect millions of domestic farmers.

The dairy sector has also emerged as a major obstacle. The United States is seeking access to the Indian market for milk and dairy products derived from cows fed meat-based feed, a proposal that India has not agreed to accept.

The ongoing negotiations reflect a broader strategic and economic balancing effort between the two largest democracies, as both sides continue to work toward a comprehensive trade arrangement while key disputes remain unresolved.