India & US in Last-Minute Talks to Avoid Steep Tariffs

As a trade war spreads across Asia, India is trying hard to avoid facing the full impact of America’s rising tariffs. Behind closed doors, talks between India and the US are tense, and the stakes are high. While countries like Vietnam, Laos, Myanmar, and the Philippines have already been hit by US tariffs of up to 40%, India is keeping a backchannel open, hoping to limit duties on its exports to around 20% or less.

Negotiations have become intense. A top-level Indian team is preparing to travel to Washington again in the coming days. This will be their third trip in three months, while US negotiators have already visited India twice this quarter. Both sides hope to strike an interim deal by August 1. If talks fail, India’s exporters will lose their 90-day exemption window and could face the same steep tariffs now affecting much of Asia.

A big area of disagreement is the US demand for India to allow imports of genetically modified crops. Many in India fear this could harm native crops and hurt future exports to countries that ban GM foods. As one senior agricultural scientist warned, once these imports start, there may be no turning back. The issue of dairy is also sensitive. Since American cows often eat animal byproducts, it goes against Indian religious beliefs, and India has repeatedly said it cannot compromise on this.

Meanwhile, Indian manufacturers are already under strain. Exports of auto parts, which make up nearly 28% of India’s shipments to the US, now face a 25% tariff, which credit agency ICRA says could cost the sector about ₹9,000 crore. Steel and aluminium are under a 50% duty, threatening another $4.5 billion in trade.

The talks also touch on digital data rules under India’s new data protection law, demands for stronger intellectual property protection, and more market access for American retail giants like Amazon and Walmart. On top of that, the political atmosphere is tense. Trump has called the BRICS group, which includes India, China, Brazil, Russia, and South Africa, a challenge to US financial power and hinted at more tariffs on all BRICS nations.

Still, trade experts believe India and the US might agree on a smaller deal for now that avoids the toughest issues, giving Trump something to showcase during his campaign. But with Trump’s approach often shifting, even the best plans are uncertain until both sides sign. As one Indian negotiator put it, this is a deal India cannot afford to rush, but also cannot afford to lose.