United States and India move towards trade agreement following Trump's Vietnam deal, according to sources
In the ongoing negotiations between the United States and India, the focus has shifted to the sensitive sectors of agriculture and dairy, with both parties expressing differing views on market access and the use of genetically modified crops.
President Trump has expressed optimism about reaching a deal with India, stating that it could help American companies compete in India's market of 1.4 billion consumers. However, no details have been provided about the specifics of the potential interim trade deal between the two nations.
The core sticking points in the negotiations revolve around the US's demands for greater Indian market access in agriculture and dairy, including the acceptance of genetically modified crops. India, on the other hand, has shown strong resistance to these demands due to concerns over food safety and the livelihoods of rural farmers, making these sectors highly sensitive and politically charged for New Delhi.
As a result, agriculture and dairy are expected to remain outside the scope of the proposed interim deal, with no significant Indian tariff concessions expected in these sectors. The broader deal instead focuses on mutual tariff reductions in other sectors, with India pushing for safeguards in labor-intensive exports such as footwear, garments, and leather.
Meanwhile, the US is pushing for a fair and reciprocal trade relationship, implying that current Indian restrictions on agriculture and dairy trade are seen as unfair trade practices that have adversely affected American farmers and industries. The US views tariffs as a tool to enforce this fairness.
Negotiations may continue longer to conclude a deal, but without compromising on key agricultural and dairy issues. A trade delegation from India is still in Washington a week after arriving for talks that started last Thursday and Friday.
In a separate development, Trump announced an agreement with Vietnam that cuts US tariffs on many Vietnamese goods to 20%. However, details regarding US products entering Vietnam duty-free are scant.
On the other hand, Japan is seeking to lower separate 25% automotive and steel tariffs imposed by Trump. Trump did not mention any specific tariff reductions for India in his comments, but he did express doubt about a potential deal with Japan, suggesting a 30% or 35% tariff on Japanese goods.
It is important to note that the Indian government does not want to be seen as surrendering the interests of farmers, a strong political group in the country. As a result, disagreements over US dairy and agriculture remain unresolved in the negotiations.
Despite the challenges, both nations are aiming to finalize a potential trade deal, with the Financial Times reporting that India may finalize an interim trade deal with the US as early as this week. However, no comments were received from the U.S. Trade Representative's office, the Commerce Department, the U.S. Treasury, or India's embassy in Washington regarding the state of trade negotiations.
- The US views tariffs as a tool to enforce a fair and reciprocal trade relationship, particularly in the sectors of agriculture and dairy, which are seen as affected by unfair trade practices.
- The general-news reports suggest that India may finalize an interim trade deal with the US as early as this week, but disagreements over US dairy and agriculture remain unresolved due to concerns over food safety and the livelihoods of rural farmers.
- In both the US-India and US-Vietnam trade negotiations, the finance industry closely follows the discussions, particularly regarding the tariffs and market access, as these decisions could impact the business sector significantly.
