Ahead of reciprocal tariffs, US trade team to begin India visit today

Indicating a broad-based discussion with India, the US Embassy on Monday stated that “trade” as well as “investments” would be part of the four-day bilateral meeting starting Tuesday. India’s trade agreements, especially with developed countries, are increasingly being modelled on investment commitments from trade partners in exchange for tariff cuts by India.

However, government officials have told industry executives that India is planning to settle most trade issues during talks with the US team on a bilateral trade deal.

“Assistant US Trade Representative for South and Central Asia Brendan Lynch, along with a team of US government officials, will be in India from March 25 to 29 for meetings with Indian interlocutors as part of ongoing bilateral trade discussions,” the US Embassy said in a statement.

On the US delegation’s visit, the Commerce and Industry Ministry said the meeting is part of “regular” India-US trade-related interactions at the official level and that discussions would aim at deepening “bilateral trade and economic ties” between the two countries.

“As directed by the leaders of the two countries, India remains committed to working with the US side in the trade and economic domains to enhance prosperity and innovation in both India and the US, and to deepen supply chain integration between the two countries,” the ministry said.

A Commerce Ministry official had said the impact of US reciprocal tariffs on India remains uncertain, as the US investigation to determine the rates is still ongoing. The current discussions with the US don’t involve reciprocal tariffs but are focused on the contours of the bilateral trade agreement.

“Reciprocal tariffs are not something we are engaging in because it is a US policy. With us, they have chosen a bilateral path, so we are focusing on that. We do not yet know whether reciprocal tariffs will be sectoral or product-wise. We have not approached the US on reciprocal tariffs; we are engaging with them as per our joint statement. We are currently working on defining the scope of the first tranche of the BTA,” the official said.

The official added that both countries are discussing their respective demands, and India has not retaliated against US tariffs but has indicated tariff cuts instead.

Last week, US President Donald Trump had said that India would face reciprocal tariffs from April 2. “I have a very good relationship with India, but the only problem I have with India is they’re one of the highest tariffing nations in the world. I believe they’re probably going to be lowering those tariffs substantially, but on April 2, we will be charging them the same tariffs they charge us,” Trump said in an interview with US-based Breitbart News.

The upcoming meeting with the US delegation assumes significance as the tariff differential between India and the US is high in several sectors. India imposes significantly higher tariffs than the US, with a simple average rate of 17 per cent as compared to the US rate of 3.3 per cent, according to a report by the Indian Council for Research on International Economic Relations (ICRIER) released last month.

The difference is particularly high in the agriculture sector. The simple average tariff for agricultural goods in India is 39 per cent, while the trade-weighted average is 65 per cent. In comparison, the US maintains relatively low agricultural tariffs, with a simple average of 5 per cent and a trade-weighted rate of 4 per cent.

The tariff differential in the ‘agriculture, meat and processed food’ category therefore stands at 32.37 per cent. Notably, India exports over $6 billion worth of agricultural products to the US, making it one of India’s largest markets.

The impact of reciprocal tariffs on the pharmaceutical and chemical sectors could also be significant, as India exports $18.44 billion worth of products to the US, and the tariff differential in this category stands at 8.69 per cent.