(Bloomberg) — President Donald Trump said that India may be hit with a tariff rate of 20% to 25%, while cautioning that the final levy still hadn’t been finalized as the nations negotiate a trade deal ahead of an Aug. 1 deadline.
“I think so,” Trump told reporters Tuesday when asked if that was a possible tariff rate for New Delhi.
“India has been a good friend, but India has charged basically more tariffs than almost any other country,” Trump said aboard Air Force One as he returned to Washington from a five-day visit to Scotland. “You just can’t do that.”
Trump’s comments came before the start of the business day in India, and Prime Minister Narendra Modi’s government has yet to issue a response.
Any rate 20% or higher would come as a disappointment for India, which had been seeking a better deal than the 19% that Trump offered Indonesia and the Philippines. Bloomberg reported earlier this month that the US and India were working toward an agreement that would reduce proposed tariffs to below 20%, even as Modi’s administration resisted demands to open up the agricultural and dairy sectors.
Although Indian officials have expressed optimism on reaching a deal, relations with the US have hit some turbulence in recent months. Trump’s insistence that his trade threats prompted India and Pakistan to reach a ceasefire in April incensed officials in New Delhi, and the US president has also threatened “secondary tariffs” on India, China and other buyers of Russian oil if President Vladimir Putin doesn’t end hostilities with Ukraine.
US Trade Representative Jamieson Greer said Monday that the US needed more time for talks with India to gauge the country’s willingness to open its market more to American exports. Reuters reported earlier Tuesday that New Delhi is bracing for higher tariffs likely between 20% and 25%.
India has conveyed to the Trump administration the red lines it won’t breach in finalizing an agreement, Bloomberg reported earlier this month, citing officials familiar with the matter. New Delhi won’t allow the US to export genetically modified crops to the country, and is unwilling to open widely its dairy and automobile sectors, the people said, asking not to be identified because the discussions are private.
India has expressed willingness to offer zero tariffs on some goods such as auto components and pharmaceuticals.
Modi’s government has taken a more cautious stance as it faces pressure to protect India’s politically sensitive farm sector. Millions depend on agriculture for their livelihoods and farmers form a key voting bloc for Modi’s party, which faces a crucial state election in the coming months.
India and the US have already signed terms of reference for a bilateral trade deal and have been negotiating an interim agreement that New Delhi hoped would give it a reprieve from higher US import duties.
The president was commenting ahead of an Aug. 1 deadline when a slew of so-called reciprocal tariffs are set to take effect on dozens of trading partners. Trump announced higher levies in April, before pausing those tariffs at a reduced 10% rate to allow time for negotiations. Despite an extended deadline, Trump has only secured a handful of deals.