India & US return to negotiating table after Trump’s penal tariffs: Will a trade deal finally take shape?

India and US will hold their first in-person trade talks since President Donald Trump imposed penal tariffs on New Delhi over purchases of Russian oil effective August 27.

A delegation of US trade officials is visiting New Delhi on Tuesday, said Rajesh Agrawal, special secretary, Department of Commerce. They will be led by Brendan Lynch, assistant US Trade Representative for South and Central Asia.

“We will be holding talks tomorrow to see what will be the future” of trade negotiations, he said. The meeting will only look at the course of action to be taken on trade-related issues and is not the next round of talks on the proposed bilateral trade agreement (BTA).


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The move follows Trump adopting a more conciliatory tone in statements last week and expressing optimism over finalisation of the trade deal.

The US trade team had been scheduled to visit India August 25-29 for the sixth round of negotiations on the BTA but this got deferred amid Washington imposing steep 50% tariffs on India, of which 25% is a penal levy for buying oil from Russia. Both sides have held virtual meetings on a weekly basis since then.
The day-long meeting will be a precursor to the next formal round of negotiations that will take place depending on the outcome of the discussions.

“This is not an official ‘round’ of negotiations but it will definitely be a discussion on the trade talks and on trying to see how we can reach an agreement between India and the US,” said Agrawal, who is India’s chief negotiator in the trade talks with the US.

The two sides have been engaged in discussions at various levels — ranging from the team of negotiators to the ministerial level — and so Tuesday’s meeting should be seen as a “continuation” of the talks, he said. India's exports to the US fell to $6.86 billion in August from $8.01 billion in July, trade ministry data released on Monday showed.

Another government official said that the two sides have been engaged virtually, but talks did not progress because the “environment was not conducive”. The US has been pressuring India to curb Russian oil purchases, as it claims this is helping to fund that country’s war with Ukraine.

US ambassador-designate to India Sergio Gor told the Senate last week that Trump has invited the country’s trade minister to meet US Trade Representative (USTR) Jamieson Greer in Washington.

“We have also noted that, as part of his Senate hearing, he mentioned that the Indian trade minister has been invited,” Agrawal said. “Tomorrow, we will have discussions on it… Only trade-related issues will be discussed, non-trade issues will not be discussed.”

Lynch was previously the USTR’s director for India and served in the agency’s Office of Agricultural Affairs. “There have been discussions going on (between India and the US) on the diplomatic level and at the level of trade negotiators and ministers,” said commerce secretary Sunil Barthwal. “On the trade front, a team of US trade negotiators will be coming to India for discussions. Further courses of action will also be discussed, but overall there is a positive frame of mind in both the countries with respect to trade issues.”

Change in Trump’s stance

In recent days, there has been a change in stance with Trump stating that India and the US are continuing negotiations to address the trade barriers between them.

“I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries,” he posted last week on Truth Social.

Prime Minister Narendra Modi responded to the statement saying that teams from both countries are working to conclude these discussions at the earliest.

Last week, Trump called on EU officials to consider imposing tariffs of up to 100% on China and India to pressure Russian President Vladimir Putin.