- Sunday, March 09, 2025
The US president’s remarks came hours after India said it is looking at deepening trade ties with the US under a bilateral trade agreement
By: India Weekly
US PRESIDENT Donald Trump said on Friday (7) that India has “agreed” to “cut their tariffs way down” as they have been finally exposed.
Trump said at the Oval Office, “India charges us massive tariffs, massive you can’t even sell anything in India. It’s almost… it is restrictive. You know, we do very little business inside. They have agreed, by the way. They want to cut their tariffs way down now because somebody’s finally exposing them for what they have done.”
Trump’s remarks came hours after India said it is looking at deepening trade ties with the US including by reducing tariff and non-tariff barriers under a bilateral trade agreement.
In line with its “America First” policy, the US plans to impose reciprocal tariffs from April 2 on trading partners, including India, which are worrying exporters across sectors ranging from autos to electronics.
Trump warned that right now the tariffs are “temporary” and “small ones”, but “the predominant tariffs” that will be reciprocal in nature, will start from April 2 and they will be a “big game changer for our country.
US sets trade deal terms
US commerce secretary Howard Lutnick told an Indian television channel on Friday (7) that India needs to buy more defence products and lower its tariffs on US products for the two countries to be able to sign a “grand” bilateral deal.
India’s import tariffs, among the highest in the world, warrant a reassessment of its “special relationship” with the United States, Lutnick said, speaking from Washington.
He also asked India to shift defence equipment purchases away from Russia.
“We would like to focus on a bilateral conversation just between India and the United States – bring down the tariff levels that India has, that protects some of its areas,” Lutnick said.
For sensitive industries like agriculture, which India has long shielded to support its small farmers, Lutnick suggested a trade agreement with quotas and limits but emphasised that India must open up the sector.
After a meeting between Trump and Indian Prime Minister Narendra Modi last month, the two countries agreed to resolve tariff rows and work on the first segment of a deal by the fall of 2025, aiming for bilateral trade worth $500 billion by 2030.
Indian trade minister Piyush Goyal has been on a nearly week-long trip to the United States and on Tuesday met Lutnick to pursue trade talks.
“Maybe certain products have quotas. Maybe certain products have limits…And then we do the same thing on the other side and craft an agreement that makes sense for both of us,” Lutnick said.
“The Indian agriculture market has to open up. It can’t just stay closed,” he added. Referring to India’s high tariffs, Lutnick called them among the steepest globally.
Washington wants India to bring tariffs down to zero or negligible in most sectors, except agriculture, under the bilateral trade deal, Reuters has reported.
The US has a $45.6 billion trade deficit with India. Overall, the US trade-weighted average tariff rate has been about 2.2 per cent, according to World Trade Organization data, compared with India’s 12 per cent.
Defence purchases
Lutnick also asked India to shift defence equipment purchases from Russia to US products.
“India has historically bought significant amounts of its military equipment from Russia, and we think that is something that needs to end,” he said.
The US will increase military sales to India starting in 2025 and eventually provide F-35 fighter jets, Trump announced last month after meeting Modi in Washington.
India has agreed to buy more than $20 billion of US defence products since 2008.
On the impact of tariffs on inflation, Lutnick dismissed concerns, saying: “Inflation only comes from running deficits and printing money. Tariffs have not created inflation in India, so that argument is nonsense.
“I want manufacturing to come back home. And if that means I need to put a 25 per cent tariff on the outside world, I’ll do that.”
Trump’s relentless attacks
Since assuming office on January 20, Trump on multiple occasions criticised India for higher tariffs and even described the country as a “tariff king” and ‘tariff abuser’.
In its Union budget for 2025-26, India announced its decision to lower tariffs on Bourbon whiskey, wines, and Electronic Vehicle (EV) segments.
The decisions were seen as an attempt to send a signal to the Trump administration that New Delhi is open to bring down tariffs in specific sectors. (Agencies)
