There is a Trump deal within the trade deal, which is making things tricky

India seems to have hit a Trump wall in its trade deal negotiations with the US. Unlike other segments of the relationship like security and terrorism, where India has been able to nudge its pieces through the American system, the trade deal has got looped into a different White House orbit - an orbit with shifting goalposts and changing field.

So, what's holding up the deal? After all, India was among the early movers on initiating a trade conversation with the Trump regime. And, yet, an agreement has eluded both sides, while others appear to be closing the gap sooner, including the EU, which struck a deal with US on a 15% tariff slab on Monday.

In India's case, White House changed the frame last minute. Both sides had agreed in February to work on an early harvest agreement by September, which would cover close to 40% tariff lines. This was to be a concrete deliverable during a planned Trump visit to India around the same time.


The early harvest was to be followed by widening negotiations on to more tariff lines with the object of covering 90% tariff lines that would then close Phase 1 of the trade deal. The second phase was to be a more detailed and protracted negotiation on aligning standards and adopting mutually acceptable quality control measures.

But Trump, it appears, changed his mind when the proposed early harvest agreement reached his table. White House now feels Phase 1 should be completed in its entirety before any agreement is signed. Efforts are on to get Trump to reconsider. But, for now, negotiators are headed back to the table to pick up the threads again to rejig, and, if needed, recast the entire frame.

Next month's talks would probably be the 50th round of negotiations with the US, making it by far the longest trade negotiation the Trump regime has held with any country or grouping. A big part of the reason is India has a comparatively higher tariff structure, which only complicates line-by-line negotiation. But New Delhi has, on this occasion, extended a bold offer going by its own track record. Yet, it will miss Trump's August 1 tariff deadline.

Will it be extended for India, given that a US team is headed to Delhi for another round? The jury is still out on this because Trump has generally maintained a 'no-extension' stand. But with 15% slab agreed with the EU, revenues will swell, giving him room to accommodate some exceptions.

From an Indian standpoint, the pattern emerging in the larger picture from Trump's negotiation with the EU and other countries is that focus is on arriving at an understanding on a single overall tariff figure. All tariff line negotiations will eventually have to settle at that one number. For Britain, it was 10%, the EU and Japan settled at 15%, Indonesia 19%, and Vietnam was about about 20%-plus.

So, this is the 'Trump deal' within the trade deal. It's unprecedented and, until now, not even properly documented as a model. However, that's the way the pattern has held. India doesn't have a number on offer yet from the US. But, in all probability, this is the direction in which negotiations are likely to head. The problem for India is its own complicated high-tariff structure, which will make it a more difficult exercise to reconcile, as opposed to generally low-tariff economies like the EU and Japan.

The tricky bit will be to figure out the minutiae of the Trump deal in the trade deal, which is also bundled into a number by way of procurements from the US, business deals and investment opportunities to US companies as well as crypto mining - not to forget the interests of the Trump Organisation and its entities.

What India can, and must, do is prise open win-win opportunities like civil nuclear energy cooperation. Though not listed until now in Parliament's monsoon session agenda, GoI ought to consider expediting the introduction of a new or amended nuclear liability bill, along with relevant amendments to the Atomic Energy Act.

A continuous emphasis on the criticality of strategic relationship from a security perspective is vital. On that score, Trump's inclination to play the Pakistan card is counterproductive - one that India will have to counter at all levels.

On a broader plane, what's noteworthy is that the EU, for its 15% tariff deal, has committed to purchasing US energy supplies worth $750 bn over three years in a strategic shift from Russian fuel. France is already expressing concerns over the entire deal. The number for Japan is $550 bn worth of investment, which the Japanese government is scrambling to explain as loans to its domestic audience. Saudi Arabia and the UAE have announced $1.3 tn and $1.4 tn, respectively, of investments, procurements and business partnerships over 10 years with the US.

These are staggering numbers for GoI, which is still working on US defence procurement plans in the $8-10 bn range. In India's domestic politics, deals like these are a minefield for any government to navigate. This is a politically awkward situation on which the future of the trade deal may just rest, one that will require constant strategic bargaining, while at the same time considering doable commitments on the Trump commercial agenda.