The latest round of talks in New Delhi, which included a visit by US Trade Representative Jamieson Greer, was expected to help bridge the remaining gaps between the two countries. Yet no agreement emerged from the discussions, highlighting the challenges that still stand in the way of a deal.
While issues such as agriculture and market access remain under discussion, trade experts believe the biggest obstacle is uncertainty surrounding future US tariff policy. With a temporary tariff set to expire on July 24 and Washington considering a broader restructuring of its tariff regime, negotiators are trying to determine what kind of market access India can realistically secure in the long term.
Why are the negotiations proving difficult?
Trade agreements often become harder to conclude as they approach the finish line.
Countries may agree on broad objectives early in negotiations, but the final phase usually involves politically sensitive sectors and specific concessions that directly affect domestic industries. These are often the issues that governments find most difficult to resolve.
In the India-US talks, agriculture remains one such area. Indian farmer groups have repeatedly expressed concerns about opening the domestic market to greater foreign competition, limiting the flexibility available to negotiators.
However, agriculture is only part of the challenge. A much larger question concerns the future of US tariffs and whether any concessions secured today will remain meaningful after Washington finalises its next trade policy framework.
Why are US tariffs at the centre of the talks?
The current negotiations are taking place against a backdrop of significant uncertainty in US trade policy.
Indian exports currently face normal most-favoured-nation (MFN) tariffs as well as an additional 10% tariff that is scheduled to expire on July 24. What happens after that date remains unclear.
The US administration has indicated that it is reviewing and rebuilding parts of its tariff framework through various trade and national security mechanisms. That raises the possibility that new tariff measures could replace existing ones once the temporary arrangements end.
For India, this creates a dilemma. Even if negotiators secure market-access concessions today, the value of those concessions could be reduced if a new tariff structure emerges shortly afterwards.
As a result, India is not only negotiating tariff reductions but also seeking greater certainty about the future trading environment.
What are Section 122 and Section 301 tariffs?
Much of the discussion revolves around different legal tools available to the United States to impose trade restrictions.
Section 122 allows the US President to impose temporary import restrictions or tariffs under specific circumstances. Measures introduced under this provision are generally intended to be short-term.
Section 301 is a separate mechanism that allows the United States to investigate and respond to practices it considers unfair or discriminatory. Tariffs imposed under Section 301 can be broader in scope and may remain in place for longer periods.
For Indian policymakers, the concern is not merely the current tariff burden but the possibility that new tariffs could emerge after the temporary measures expire.
Why does the legal status of tariffs matter?
The uncertainty is compounded by legal questions surrounding some US tariff measures.
Several tariffs imposed in recent years have faced challenges regarding their consistency with World Trade Organization (WTO) rules. In addition, recent court rulings in the United States have raised questions about the legal basis for certain trade actions.
This means negotiators are dealing with more than traditional market-access issues. They must also assess what tariff commitments the United States can realistically offer and whether those commitments are likely to remain in place.
For businesses and exporters, predictability can be just as important as tariff reductions themselves.
What happens if no deal is reached by July 24?
Missing the July 24 deadline would not automatically trigger a trade crisis.
Before the recent tariff measures, Indian exports to the United States faced an average trade-weighted MFN tariff of roughly 2.8%, while US exports entering India faced a weighted average MFN tariff of around 7.7%.
The larger concern is uncertainty rather than immediate disruption.
If the temporary tariff regime expires without a replacement framework or a trade agreement, businesses may have little visibility on the tariff environment they will face in the months ahead. Future developments will largely depend on how Washington proceeds with its ongoing trade investigations and whether additional tariffs are introduced.
Why is India moving cautiously?
New Delhi appears unwilling to sign an agreement solely to meet a deadline.
Indian policymakers have consistently emphasised that any trade deal must generate tangible benefits for domestic industry, exporters and workers. They are also seeking assurances that Indian goods will enjoy a durable competitive advantage in the US market.
From India’s perspective, committing to concessions without clarity on future US tariff policy could undermine some of the gains achieved through the negotiations.
That is why negotiators appear prepared to continue discussions beyond July if necessary rather than rush into an agreement with unresolved questions.
Can a deal still be reached?
Yes.
Both governments continue to express confidence that an interim agreement remains within reach. Significant progress has reportedly been made across several areas of the negotiations.
However, the remaining issues are among the most consequential. They involve not only tariff levels and market access but also broader questions about the future direction of US trade policy and the durability of any commitments made today.
As a result, the final stretch of the India-US trade talks may prove to be the most challenging phase of the entire negotiation process.
The outcome will depend on whether both sides can bridge differences on sensitive sectors while also finding a way to address the uncertainty surrounding future US tariffs—a factor that has increasingly become the central issue in the negotiations.
