US, India Rush to Finalize Tariff-Reducing Trade Deal as Disputes Over Dairy and Agriculture Persist
With just days left before a major tariff deadline, the United States and India are working around the clock to finalize an interim
trade deal that could lower tariffs and boost economic ties. However, talks remain stuck on sensitive issues—especially agriculture and dairy—where both sides are refusing to back down.
What’s at Stake?
- The US has threatened to raise tariffs on Indian goods to 26% if a deal is not reached by July 9. Currently, a temporary 10% tariff is in place to allow time for negotiations.
- Both countries want to avoid these higher tariffs, which would hurt exporters and consumers on both sides.
Key Disagreements
- The US is pushing India to open its markets for American farm products, including genetically modified crops and dairy. These are politically sensitive in India, where the dairy sector supports over 80 million people, many of them small farmers.
- India has firmly refused to allow more US dairy imports or genetically modified crops, citing risks to food safety and the livelihoods of rural families. “There is no question of conceding on dairy. That’s a red line,” said a senior Indian official.
- India also wants the US to lower tariffs on its labor-intensive exports like garments, footwear, and leather, which are important for jobs in India.
Progress and Hopes
- Despite the deadlock on agriculture, negotiators have made progress in other areas, such as reducing tariffs on walnuts, cranberries, medical devices, automobiles, and energy products from the US.
- Both sides see this interim deal as a first step towards a broader agreement that could double trade to $500 billion by 2030.
Why Is This Important?
- The deal is not just about economics. Both countries see it as a way to strengthen their partnership at a time of global uncertainty and competition.
- US President Donald Trump has said he is optimistic about reaching a deal that will help American companies compete in India’s vast market of 1.4 billion people.
What Happens Next?
- Indian negotiators have extended their stay in Washington, hoping to bridge the gap before the July 9 deadline.
- If no deal is reached, tariffs will rise, making many products more expensive and possibly straining relations between the two countries.
As the clock ticks down, both Washington and New Delhi are under pressure to find common ground, without compromising on their core interests. The outcome will affect not just trade, but the broader relationship between two of the world’s largest democracies.