Ishaan Thakker
Negotiations for a U.S.-India trade deal have been progressing at breakneck pace, as officials rush to reach an agreement before President Donald Trump’s July 9 tariff deadline. India being near the front of the line is surprising, given that the two countries have consistently imposed high trade barriers and haven’t signed a deal despite years of discussions.
But Delhi is ready to negotiate because it sees an even bigger geoeconomic play: undercut China’s status as a leading manufacturing hub and destination for investment by securing key supply chains and investing in advanced technologies. To seal the deal, Washington and Delhi should put economic security issues at the heart of the agreement.
Getting to yes will require overcoming a long history of nos. In 2019, the U.S. removed India from the Generalized System of Preferences (GSP) program, and India imposed retaliatory tariffs on 28 U.S. goods in response to earlier Section 232 tariffs on steel and aluminum. While mutual tech and defense cooperation increased during the Biden administration, and India joined the non-trade pillars of the Indo-Pacific Economic Framework, there was little progress in improving market access apart from the removal of previous tariffs and resolution of WTO disputes.
Despite Trump’s recent optimism, ongoing negotiations for a first tranche deal are facing several hurdles, largely due to U.S. demands for lower trade barriers for steel and agricultural products. The task of lowering tariffs and non-tariff barriers for agriculture is especially politically costly for the Indian government,
given that 46 percent of the workforce is involved in agriculture. While still willing to negotiate, Indian officials have signaled their preference for a good deal that puts national interest first rather than just a deal, which may defer discussions on tariffs for key industries and constituencies to a future round of negotiations.
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