India-US Trade Talks Collapse as Deadline Looms: Agriculture, Auto, Steel Remain Sticking Points
New Delhi/Washington | July 5, 2025
India’s trade delegation returned from Washington on Friday without securing a much-anticipated interim trade deal with the United States. The failure comes just five days ahead of President Donald Trump’s July 9 deadline to enforce reciprocal tariffs on Indian goods, deepening uncertainty over the future of bilateral trade ties.
Led by chief negotiator Rajesh Agrawal, the Indian team had been engaged in talks since June 26, aiming to resolve longstanding disputes and finalize an agreement during External Affairs Minister S. Jaishankar’s visit to Washington. However, core differences—particularly around agriculture, automobiles, and steel—remain unresolved.
Commerce Minister Piyush Goyal emphasized India’s firm stance, stating, “India will not sign any deal under pressure or deadlines. We are committed to agreements that serve mutual interests.”
Agriculture Access Demand Hits a Wall
The biggest hurdle continues to be the Trump administration’s push for broader access to India’s agricultural market, specifically for genetically modified corn, soybeans, wheat, and rice. India has refused to reduce import duties or open its dairy sector—an area that supports over 80 million livelihoods and has never been part of any free trade agreement.
Stalemate on Automobiles and Steel
According to Reuters, both sides remain at odds over duties on automobile components and industrial goods, particularly electric vehicles, petrochemicals, wine, and tree nuts. The US is seeking tariff concessions for these products, while India is pushing for lower duties on its labor-intensive exports such as textiles, leather, chemicals, and gems & jewelry.
“There are complex issues in the agriculture and auto sectors that still need resolution,” an Indian official told the Economic Times, highlighting how domestic political sensitivities—especially in the farming sector—are influencing India’s position.
Ticking Clock: July 9 Tariff Threat
India had imposed additional retaliatory tariffs of 26% on American products in April but suspended them for 90 days in good faith. That suspension ends on July 9, unless a breakthrough is reached. While India seeks full exemption from these duties, Washington is pressing for deeper cuts to existing Indian tariffs.
President Trump further escalated pressure on Thursday by announcing that the US would begin issuing formal tariff letters to trade partners starting Friday.
Both nations have set an ambitious target of increasing bilateral trade from $191 billion to $500 billion by 2030. However, the deadlock represents a sharp turn from earlier optimism, where Trump hinted at a “zero tariff” pact and US officials had praised India’s willingness to make a deal.
Conclusion: Deal in Doubt Amid Rising Tensions
As negotiations stand still, the chances of a quick resolution are fading. India remains cautious of opening sensitive sectors to foreign influence, while the US pushes hard for market access. With just days left, the focus now shifts to political leadership and whether diplomacy can bridge the widening gap.
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