India, US resume trade talks in New Delhi today: Can they navigate Trump tariff tensions?

India and the United States will be back at the negotiating table to work out a trade deal in New Delhi today, raising hopes for a breakthrough weeks after President Donald Trump imposed punitive tariffs on India for buying Russian oil.

The trade talks are taking place after the much-deferred arrival of the US delegation in New Delhi. Trump struck a more conciliatory tone in recent statements and expressed optimism that a trade deal could be finalised soon.

US Trade Representative for South Asia Brendan Lynch will lead the American side during the day-long negotiations, news agency Reuters reported. Senior Commerce Ministry official Rajesh Agarwal will represent India during the meeting, the agency said.

Trump last month slapped a punitive 25 per cent levy on India from August 27, doubling overall tariffs to 50 per cent, as part of Washington’s efforts to step up pressure on Moscow over its invasion of Ukraine.

‘Exports fell to $6.86 billion in August’

India’s exports to the United States fell to $6.86 billion in August from $8.01 billion in July, trade ministry data released on Monday showed. Total goods exports fell to a nine-month low of $35.10 billion in August from $37.24 billion in July, while the trade deficit narrowed to $26.49 billion, Reuters reported

The full impact of higher tariffs from the United States on Indian goods imports will be felt next month as the punitive tariffs kicked in from August 27, exporters said in the Reuters report.

New Delhi’s discord with Washington has coincided with increased contacts with Beijing. Prime Minister Narendra Modi visited China for the first time in seven years last month to attend a summit hosted by President Xi Jinping.

Modi was also seen holding hands with Russia’s President Vladimir Putin.

An earlier US visit to New Delhi, planned for August 25-29, was cancelled after talks hit major roadblocks. New Delhi had resisted Washington’s efforts to open its vast agricultural and dairy sectors.

But Sergio Gor, Trump’s nominee for ambassador to India, said last week that the two sides were “not that far apart” on tariffs and that differences would be resolved in the next few weeks.

What to expect?

Officials see today’s talks as a possible opening to rescue a free trade agreement that had been thrown into doubt by the tariffs, which kicked in on August 27. India and the US have already had five rounds of talks on the trade deal and the sixth round scheduled in August was rescheduled.

Lynch oversees the development and implementation of US trade policy with regard to 15 countries in the region, including management of the US-India Trade Policy Forum (TPF) as well as coordination of activity under Trade and Investment Framework Agreements (TIFAs) with regional partners.

“We have indicated that in the past, also the discussions are going on, the chief negotiator of the US is visiting India tonight and tomorrow will be holding talks to see what can be the picture. It is not the sixth round of negotiations, but it is definitely discussions on the trade talks and trying to see how we can reach an agreement between India and the US,” Agarwal, India’s chief negotiator, said on Monday.

Proposed bilateral trade agreement: Goyal

Union Minister for Commerce and Industry Piyush Goyal on September 11 said that trade negotiations between India and the United States on the proposed bilateral trade agreement (BTA) are progressing to the satisfaction of both countries, PTI reported.

As per the minister, Prime Minister Narendra Modi and US President Donald Trump had tasked both their trade ministers in February with concluding the first phase of the BTA by “the fall of 2025”—which is November.

But negotiations hit a dead end because Washington sought larger access to India’s agricultural and dairy markets, which are red lines for New Delhi.

‘Not much progress’

“It is not a round of negotiation. But we will try to see how we can reach an agreement with the US. We had been talking virtually but we have not made much progress because the environment was not conducive,” an official was quoted as saying by the Indian Express.

Commerce Secretary Sunil Barthwal told the news paper that there have been discussions at the diplomatic, trade, chief negotiator, and ministerial levels.

“Further courses of action will also be discussed. But overall, there is a positive frame of mind in both countries with respect to trade issues,” Barthwal told Express.

Interim Trade Deal by Fall

Ahead of today’s meeting in New Delhi, White House trade adviser Peter Navarro said on Monday that India was “coming to the negotiating table.” In recent weeks, Navarro had indulged in an India offensive and even accused New Delhi of profiteering from Moscow’s war in Ukraine and branded it the Kremlin’s “laundromat.”

Prime Minister Narendra Modi last week welcomed US President Donald Trump’s positive remarks on trade talks, expressing optimism that the ongoing negotiations will unlock the limitless potential of their partnership.