Though President Donald Trump last week imposed a 30% tariff on the European Union (EU), the key trading partner of the US, India must not bend over backwards to accommodate US interests as it sits down to negotiate a bilateral trade agreement (BTA) with the US again this week, trade experts said.
“Both EU and Mexico are major trade partners of US….when US can impose tariffs on these to pressurise them into quick deals, India cannot expect a balanced deal..India must watch out and not accept US demands at the expense of Indian farmers and industry,” founder of Global Trade Research Initiative (GTRI) Ajay Srivastava said.
A team of Indian trade negotiations is expected to visit Washington again this week to further the negotiations on a BTA and an interim deal whose immediate purpose would be to bring down reciprocal tariffs on India.
The US shot off tariff letters to 24 countries so far. On its key trading partners like the EU and Mexico 30% duties have been proposed from August 1 and on Canada 35%.
Along with the notification of tariffs, the Trump letters hold out an offer to negotiate a trade agreement on American terms or a threat of punitive tariffs.
“Under the Trump model, only the partner country lowers its MFN tariffs, while the US makes no reciprocal cuts. Trump lacks Fast Track Trade Authority from Congress to reduce MFN tariffs. Instead, he is offering to roll back only the “Liberation Day” tariffs imposed in April under emergency powers,” Srivastava said.
According to the United States Trade Representative (USTR), the US goods trade deficit with the EU was $235.6 billion in 2024, up 12.9% on year. In 2024, EU-US merchandise trade, as per the EU, was worth €867 billion. .
Trump now wants countries not just to reduce tariffs, but to guarantee purchases of American agriculture, oil, gas, and aircraft. Even with Australia—where the U.S. enjoys a sizable trade surplus—Washington is demanding additional commitments, including beef imports, analysts feel.
Even if India gets an agreement with the US, no deal by Trump is final. While talks continue on agreements and tariffs, the US President has threatened an additional 10% tariff on BRICS countries—including Brazil, Russia, India, and China—if they pursue what he calls “anti-American” policies.
Despite the uncertainty, India remains a top candidate for a trade deal but New Delhi must tread carefully. “With the U.S. showing willingness to override agreements and impose unilateral conditions for example on BRICS members, India must weigh the strategic value of engagement against the risks of an imbalanced deal,” a GTRI study said.