In a significant development for global trade diplomacy, former U.S. President Donald Trump has announced a 90-day suspension of the steep 26 per cent tariffs imposed on Indian goods, paving the way for a long-awaited India-US trade deal.
The temporary pause, which comes into effect immediately and will last until July 9, 2025, has injected fresh momentum into bilateral trade talks that have been lingering in technical stages for years.
According to a senior Indian trade official, both countries have now finalized the terms of reference for the first phase of the agreement, and negotiations are described as being in an “advanced stage.”
The aim is to reach a preliminary deal within the 90-day window, with both New Delhi and Washington eyeing an agreement that delivers a “win-win” outcome.
The Trump administration’s decision to halt the tariff hike follows its April 2 order that imposed universal tariffs on exports from over 60 countries.
While India, Vietnam, and Thailand were hit hard with high tariff rates, China, including Hong Kong and Macau, were conspicuously excluded from the relaxation—highlighting Washington’s evolving trade strategy and its preference for strategic allies like India.
India’s measured response to the initial tariff escalation—marked by restraint and diplomatic dialogue rather than retaliatory action—appears to have worked in its favor. The 90-day pause is now being used by Indian officials to secure more favorable terms and expand market access for key exports.
Sectors like pharmaceuticals, shrimp, steel, textiles, and auto parts are particularly poised to benefit, as these industries were vulnerable to the previously announced duties.
In fiscal year 2024, the bilateral trade volume between India and the U.S. crossed $118 billion, cementing the U.S. as India’s largest trading partner.
The ongoing negotiations are not just aimed at reversing the tariff hikes but also at establishing long-term mechanisms to reduce trade friction, create investment opportunities, and ease regulatory challenges.
“Our talks with the U.S. are ahead of similar discussions with other nations,” the Indian official noted, adding that virtual negotiations will continue on a weekly basis over the next three months. If a draft deal is finalized before the July deadline, it would represent one of the most impactful trade agreements in recent India-US relations.
The White House, meanwhile, appears to be aligning trade policy with broader strategic goals. The exclusion of China from the tariff pause and the focus on deepening economic ties with like-minded partners underscore a pivot in U.S. global trade posture.
India’s commitment to diplomacy and its growing influence as a regional economic power likely played a key role in securing this opportunity.
Political observers and trade analysts believe that a successful India-US trade deal before July could have ripple effects beyond commerce.
It may influence geopolitical dynamics in the Indo-Pacific, shape investor sentiment, and strengthen India’s position as a reliable partner in the West’s economic strategy to counterbalance Chinese dominance.
Back home, the pause in tariffs has triggered a surge in optimism in Indian markets. On the day of Trump’s announcement, the Sensex soared over 1,100 points and the Nifty approached the 22,800 mark, reflecting investor confidence in a positive trade outcome.
As the clock ticks on this 90-day window, both nations are under pressure to transform intent into action.
A well-rounded trade pact would not only protect billions in bilateral trade but also reassert the power of diplomacy in today’s volatile global economic landscape.
