India-US Trade Deal- What Now??

In 2025, the United States went on a spree of introducing tariffs worldwide to create a level playing field in global trade. By the introduction of reciprocal tariffs, the understanding of the United States was to inflict as much discomfort on nations with whom trade was carried out, since many of their goods were heavily tariffed.   Many nations feared that their markets would be flooded with the US-based products, giving them no chance of surviving the competition. Hence, many countries, including India, took the route of getting many of the US import tariffs to protect the interests of the local manufacturers and producers.

India-US Trade Deal

Recent Developments in Tariffs

India and the US have had a rough start with the introduction of the tariffs. With the introduction of 26% tariffs imposed on Indian goods in the first phase of the announcement of tariffs, our country was put in an unfair position compared to its peers in the Southeast and Middle East nations. With the major exports including textiles, pharmaceuticals, electronics, and certain agricultural products, India suffered in trade with the Americans. This affected the mentioned sectors in terms of job losses, factory shutdowns, and restructuring of the management in order to stay afloat.  

The US again threw in another blow to the trade relations with India, by imposing an additional 25 % tariffs as it conducted trade by purchasing crude from the Russians. This was a major blow to the trade negotiations, which went on in the sidelines to get India out of the initial tariffs issued.

Good news  in 2026

With the new year, speculations and talks continued between the US and Indian counterparts, which resulted in removing the additional tariff of 25 percent on trade with Russia. This also resulted in the reduction of the base tariffs of 25% to 18%. This was considered to be a relief for the Indian industries who were relying on the US as their main counterpart for trade. The potential for a trade deal was in the cards for India. With this, India was meant to reduce tariffs to zero or less than what it is currently. Along with this, during the course of the trade relations with the United States, India would purchase US$500 billion worth of American technology, energy, and agricultural products.

However, the recent developments in the United States will help India negotiate better in terms of trade. The United States Supreme Court has ruled that the tariffs issued by the President are Invalid as they were meant to be invoked only in times of emergency.  With this in the picture, the tariffs, which were now at 18% now been reduced to 15% as per the court ruling, under Section 122 of the US Constitution. This is considerably good news for India as its exposure to the US tariffs is significantly reduced. With many of the threats from the US now gone, a fresh agreement can now be signed by India. This will be a considerable win for  India as it can now play an upper hand in terms of the negotiations.  As far as the refund of the tariff collected, the United States will need to figure out the best possible alternatives to return the money collected in the name of tariffs.

Overall, this is a good start to restructure and restore the trade relations once again among nations globally.