<p>New Delhi: President Donald Trump said on Wednesday the United States would impose a 25 per cent tariff on Indian goods starting August 1, citing New Delhi’s high tariffs and strict non-monetary trade barriers.</p><p>Following are the key issues that appear to have derailed the trade talks between the US, the world's largest economy, and India, its fifth largest:</p><p><strong>Contentious issues</strong></p><p>India has resisted US demands to open its agricultural and dairy markets, saying such moves would hurt millions of poor farmers. New Delhi has historically excluded agriculture from free trade pacts to protect domestic livelihoods.</p>.Trump's tariff tirade | A timeline of US President's 'trade war' with nations.<p>Tariff cuts on corn, soybean, wheat and ethanol remain off the table, with Indian officials citing risks from subsidised US farm products. Domestic automakers, pharma firms and small industries have also lobbied for only a gradual opening, fearing disruption from US imports.</p><p><strong>High tariffs</strong></p><p>According to a White House fact sheet, India imposes an average MFN (Most Favoured Nation) tariff of 39 per cent on imported farm goods, compared to 5 per cent in the US, with some duties as high as 50 per cent.</p><p>Trump’s administration has repeatedly flagged these tariffs as a key obstacle to deeper trade ties with India.</p><p><strong>US demands</strong></p><p>Washington is pushing for better access to India’s markets for agriculture, ethanol, dairy, alcoholic beverages, autos, pharmaceuticals, and medical devices. It also wants India to reduce non-tariff barriers, and reform rules on patents, digital trade, and data flows.</p><p><strong>Lack of reciprocity</strong></p><p>Despite offering limited tariff cuts and boosting imports of US energy and defence goods, India says it is still awaiting clear proposals from Washington. Officials cite Trump’s unpredictable trade moves as a concern.</p><p>Indian exporters remain uneasy over rising US levies on imports: a 10 per cent base tariff, up to 50 per cent on steel and aluminium, 25 per cent on autos, and now 25 per cent across a broader range of goods.</p><p><strong>Tensions over Pakistan</strong></p><p>Trump’s repeated assertions that he helped broker a ceasefire between India and Pakistan earlier this year have raised concerns in New Delhi. Indian officials view the remarks as a strategic tilt toward Pakistan, complicating broader bilateral relations.</p><p><strong>Overconfidence in a deal</strong></p><p>Indian officials were initially confident of a deal, expecting the US to favour deeper trade with one of its biggest commercial partners. Modi and Trump had aimed to sign a first-phase pact by autumn 2025, targeting bilateral trade of $500 billion by 2030, up from $191 billion in 2024.</p><p>Despite the tariff setback, India hopes its exports – including pharmaceuticals, electronics, engineering goods and garments – could remain competitive, especially with tariff advantages over China.</p><p>Indian goods exports to the US rose to $87 billion in 2024, with gems and jewellery ($8.5 billion), pharma ($8 billion) and petrochemicals ($4 billion) leading the list. Services exports, mainly IT and professional services, were worth $33 billion.</p><p>The United States is India’s third-largest investor, with $68 billion in cumulative FDI since 2002.</p><p><strong>US exports to India</strong></p><p>US manufacturing exports to India, valued at nearly $42 billion in 2024, face high tariffs, ranging from 7 per cent on wood products and machinery to as much as 15 per cent to 20 per cent on footwear and transport equipment, and nearly 68 per cent on food.</p>
<p>New Delhi: President Donald Trump said on Wednesday the United States would impose a 25 per cent tariff on Indian goods starting August 1, citing New Delhi’s high tariffs and strict non-monetary trade barriers.</p><p>Following are the key issues that appear to have derailed the trade talks between the US, the world's largest economy, and India, its fifth largest:</p><p><strong>Contentious issues</strong></p><p>India has resisted US demands to open its agricultural and dairy markets, saying such moves would hurt millions of poor farmers. New Delhi has historically excluded agriculture from free trade pacts to protect domestic livelihoods.</p>.Trump's tariff tirade | A timeline of US President's 'trade war' with nations.<p>Tariff cuts on corn, soybean, wheat and ethanol remain off the table, with Indian officials citing risks from subsidised US farm products. Domestic automakers, pharma firms and small industries have also lobbied for only a gradual opening, fearing disruption from US imports.</p><p><strong>High tariffs</strong></p><p>According to a White House fact sheet, India imposes an average MFN (Most Favoured Nation) tariff of 39 per cent on imported farm goods, compared to 5 per cent in the US, with some duties as high as 50 per cent.</p><p>Trump’s administration has repeatedly flagged these tariffs as a key obstacle to deeper trade ties with India.</p><p><strong>US demands</strong></p><p>Washington is pushing for better access to India’s markets for agriculture, ethanol, dairy, alcoholic beverages, autos, pharmaceuticals, and medical devices. It also wants India to reduce non-tariff barriers, and reform rules on patents, digital trade, and data flows.</p><p><strong>Lack of reciprocity</strong></p><p>Despite offering limited tariff cuts and boosting imports of US energy and defence goods, India says it is still awaiting clear proposals from Washington. Officials cite Trump’s unpredictable trade moves as a concern.</p><p>Indian exporters remain uneasy over rising US levies on imports: a 10 per cent base tariff, up to 50 per cent on steel and aluminium, 25 per cent on autos, and now 25 per cent across a broader range of goods.</p><p><strong>Tensions over Pakistan</strong></p><p>Trump’s repeated assertions that he helped broker a ceasefire between India and Pakistan earlier this year have raised concerns in New Delhi. Indian officials view the remarks as a strategic tilt toward Pakistan, complicating broader bilateral relations.</p><p><strong>Overconfidence in a deal</strong></p><p>Indian officials were initially confident of a deal, expecting the US to favour deeper trade with one of its biggest commercial partners. Modi and Trump had aimed to sign a first-phase pact by autumn 2025, targeting bilateral trade of $500 billion by 2030, up from $191 billion in 2024.</p><p>Despite the tariff setback, India hopes its exports – including pharmaceuticals, electronics, engineering goods and garments – could remain competitive, especially with tariff advantages over China.</p><p>Indian goods exports to the US rose to $87 billion in 2024, with gems and jewellery ($8.5 billion), pharma ($8 billion) and petrochemicals ($4 billion) leading the list. Services exports, mainly IT and professional services, were worth $33 billion.</p><p>The United States is India’s third-largest investor, with $68 billion in cumulative FDI since 2002.</p><p><strong>US exports to India</strong></p><p>US manufacturing exports to India, valued at nearly $42 billion in 2024, face high tariffs, ranging from 7 per cent on wood products and machinery to as much as 15 per cent to 20 per cent on footwear and transport equipment, and nearly 68 per cent on food.</p>