India is considering lowering tariffs on over half of $23 billion worth of US imports as part of an ongoing trade deal with the United States, two government sources revealed. This move, the most significant tariff cut in years, is aimed at preventing retaliatory US tariffs.
With US President Donald Trump’s new reciprocal tariffs set to take effect on April 2, global markets have been rattled, and policymakers, including those in Western nations—are rushing to respond.
According to an internal assessment, 87% of India’s exports to the US, worth $66 billion that could be impacted by these tariffs, two sources familiar with the matter told Reuters.
As part of the proposed agreement, India is prepared to reduce tariffs on 55% of US goods currently taxed at 5% to 30%. In some cases, tariffs could be significantly lowered or even eliminated on over $23 billion worth of imports, according to one of the sources.
Neither India’s trade ministry, the Prime Minister’s Office, nor a government spokesperson responded to requests for comments.
Trade Deficit and Tariff Comparison
- The US trade-weighted average tariff is 2.2%, compared to India’s 12%, based on World Trade Organization (WTO) data.
- The US runs a $45.6 billion trade deficit with India.
Ongoing Negotiations
During Prime Minister Narendra Modi’s US visit in February, the two nations agreed to initiate trade talks to resolve tariff disputes. Assistant US Trade Representative Brendan Lynch will lead a delegation for negotiations starting Tuesday.
However, Indian officials emphasized that any tariff reductions would depend on securing relief from US reciprocal tariffs. The final decision is yet to be made, and alternative options, such as sector-specific adjustments and product-by-product tariff negotiations, are also under discussion.
Additionally, India is exploring broader tariff reforms to lower trade barriers across sectors, but these discussions are still in their early stages and may not be part of the immediate US trade talks.
