KEY POINTS
- US–India trade talks collapsed after five rounds, with no breakthrough on tariff reductions.
- Trump imposed 50% tariffs on Indian goods for purchasing Russian oil.
- Indian exporters warn of job losses, with up to two million positions at risk from reduced competitiveness.
- US-India virtual “2+2” dialogue failed to produce a trade deal.
WASHINGTON/NEW DELHI: Trade talks between the United States and India have collapsed without a breakthrough, as President Donald Trump moved ahead with doubling tariffs on Indian goods to as much as 50 percent, escalating tensions between the two countries.
After five rounds of talks, Washington and New Delhi failed to reach an agreement to lower US tariff rates to around 15 percent, similar to deals struck with Japan, South Korea and the European Union.
The talks, described by officials on both sides as marked by “miscalculations and missed signals”, ended without any sign of resumption.
Trump targets Indian exports
President Trump first imposed a 25 percent levy on Indian goods in July, citing New Delhi’s continued purchase of Russian oil.
A week later, the US President added a further 25 percent, which took effect on Wednesday as the August 27 deadline expired without any deal. The additional tariffs brought the total tariff to 50 percent on a wide range of products including textiles, garments, gems and jewellery, footwear, furniture and chemicals.
“This is one of the highest tariff rates ever imposed by the United States,” MK Venu, founding editor of The Wire said as cited by Al Jazeera.
“It will wipe out India’s competitiveness in labour-intensive sectors. Businesses will shift to Vietnam, Bangladesh and other East Asian economies,” he added.
According to the US Census Bureau, two-way trade in goods between the US and India stood at $129 billion in 2024, with Washington running a deficit of $45.8 billion.
Exporter groups estimate that the tariffs could hit up to 55 percent of India’s $87 billion in exports to the US, risking as many as two million jobs.
No agreement in virtual talks
The tariffs took effect after senior officials from both sides concluded a virtual “2+2 Intersessional Dialogue” involving foreign and defence ministry representatives.
The meeting was co-chaired by Bethany P. Morrison, the Senior Bureau Official for the Bureau of South and Central Asian Affairs, and Jedidiah P. Royal, Acting Assistant Secretary of Defense for Indo-Pacific Security Affairs, alongside Indian counterparts Nagaraj Naidu Kakanur and Vishwesh Negi.
In near-identical statements, the US State Department and India’s Ministry of External Affairs described the talks as “productive”, saying both sides had “advanced bilateral initiatives” and reaffirmed their commitment to a new 10-year defence cooperation framework. However, neither side mentioned progress on trade.
Evolving US policy towards South Asia
Commenting on the evolving dynamics, Pakistan’s former ambassador to the United States, Aizaz Ahmad Chaudhry, told WE News English that South Asia is witnessing a recalibration of power, with both China and the US seeking to play a defining role.
“South Asia is witnessing a recalibration of power, with both China and the United States seeking to play a defining role,” he said.
Ambassador Chaudhry noted that India’s ambitions for regional dominance are being counterbalanced by global powers that favour stability in South Asia.
White House trade adviser Peter Navarro told Bloomberg Television that India could “get 25 percent off tomorrow” if it stopped buying Russian oil.
Washington accuses India of helping to fund Moscow’s war in Ukraine through energy imports, an allegation New Delhi rejects as a double standard, pointing to continuing US and European trade links with Russia.
Despite the trade dispute, both governments insisted the broader bilateral relationship remained strong.
Officials at the intersessional dialogue discussed defence industrial cooperation, counterterrorism, energy security and regional stability through the Quad grouping, the Indian External Affairs Ministry stated.
“The chairs reaffirmed their commitment to promoting a safer, stronger and more prosperous Indo-Pacific region,” the State Department said.
