US won’t club India with China, Canada on tariffs
US trade officials assure India it won't face the same tariffs as China, Mexico, or Canada, as talks for a bilateral trade agreement progress.
India will not be treated like China, Mexico and Canada, trade officials from the US have indicated to their counterparts in Delhi, where they held their first in-person meeting on Wednesday to negotiate a bilateral trade agreement – a process now put on “fast track”, people aware of the matter said.
The hectic parleys come against the backdrop of the looming April 2 deadline when the US is due to enforce reciprocal tariffs. Shortly after taking office on January 20, President Donald Trump resumed a trade war with China and opened two new ones with Canada and Mexico, effectively triggering disputes with the country’s three largest trading partners.
“It is now amply clear that the Trump administration does not club India with countries like China, Mexico and Canada. There is a difference,” said one of these officials with direct knowledge of the matter. “The US has serious issues with China, Mexico and Canada related to currency manipulations, illegal migration and other security concerns. But with India it has only tariff issue, that too both are resolving amicably,” this person added.
The talks, formally named “India-US Fast Track Mechanism”, began on Wednesday with the US team led by assistant trade representative Brendan Lynch and the Indian delegation headed by commerce ministry’s additional secretary Rajesh Agarwal. They are expected to finalise the basic contours of a bilateral trade agreement (BTA) by Friday.
The person cited above added that the discussions were “progressing in a cordial spirit and the outcome is expected to be satisfying for both the governments”. “This (the outcome) could be factored in by the Trump administration before deciding reciprocal tariffs on India on April 2 deadline,” this person said.
A second official aware of the matter added that part of the efforts includes another high-level trip that, this time, includes Union finance minister Nirmala Sitharaman visiting Washington later in April.
“The finance minister’s US visit may build upon the ongoing talks, but it may not be limited to trade and tariff alone. India and the US are committed to strengthen their overall economic relationship – both bilateral and multilateral -- as strategic partners,” said this person.
This face-to-face meeting follows Union commerce minister Piyush Goyal’s visit in early March, where he met US trade representative Jamieson Greer and US commerce secretary Howard Lutnick to initiate preliminary BTA discussions.
On February 13, Prime Minister Narendra Modi and President Trump pledged to increase Indo-US bilateral trade from approximately $200 billion to $500 billion (Mission 500) by 2030 and decided to forge a BTA by autumn 2025.
The pledge was in contrast to Trump administration’s moves just days earlier when the US government took aggressive tariff actions against China, Mexico and Canada, framing these moves as necessary to address contraband drug trafficking, illegal immigration, and support domestic manufacturing.
On February 1, Trump imposed a 10% tariff on all Chinese imports, which was increased to 20% on March 4. China retaliated with a 15% tariff on coal and liquified natural gas products, and 10% on crude oil, agricultural machinery and large-displacement cars.
Simultaneously, a 25% tariff was imposed on most goods from Canada and Mexico beginning February 1, though tariffs on goods compliant with the United States-Mexico-Canada Agreement (USMCA) were delayed until April 2. A planned 10% tariff on Canadian oil and gas initially set for March 4 was also suspended until April 2.
HT reported on Wednesday that Washington is pushing for India to reduce high tariff barriers for all American goods comprehensively rather than adopting a piecemeal approach. In exchange, the US is reportedly willing to address New Delhi’s concerns through built-in mechanisms such as quota restrictions to protect Indian farmers and small industries.
“Don’t expect a final solution after the three-day talk. But certainly, it will converge their differences -- some based on perception and some due to practical reasons or domestic sensitivities. Once issues are identified, solutions would not be far away,” a third official said on Wednesday.
HT has in the past cited estimates of how tariffs stack up. According to Shoumitro Chatterjee, an assistant professor of economics at Johns Hopkins University and a trade specialist, India ranks eighth among countries with which the US has a trade deficit.
His analysis of 2021-2023 data reveals tariff disparities across sectors. In agriculture, India’s average tariff on US imports is 41.8% compared to the US tariff of 3.8% on Indian imports, with India exporting $7.1 billion versus US exports of $1.6 billion. Similar patterns exist in transport equipment (Indian tariff: 14.9%, US tariff: 0.9%) and sectors like pharmaceuticals, stone, glass, metals, and pearls – with India consistently maintaining higher tariffs while exporting more to the US than it imports.
India has already taken steps to placate the US, including slashing tariffs on motorcycles and bourbon in February and proposing to remove the 6% Google tax (Equalisation Levy on online advertisements). However, these moves, while “good for signalling”, are reportedly not substantial enough to avoid the April 2 deadline.
The April 2 deadline has dominated global market sentiments. Stock indices across the world were jittery on Wednesday as investors awaited more clarity on US tariff plans. Europe’s Stoxx 600 index dropped 0.5%, while futures on the S&P 500 and Nasdaq 100 were down about 0.2%.
In India, the 30-share BSE Sensex tanked 728.69 points or 0.93% to settle at 77,288.50, while the NSE Nifty dropped 181.80 points or 0.77% to 23,486.85. This came after both indices had gained over 5.67% in the previous seven trading sessions.
“The market experienced profit-booking after the recent gains, on the back of next week’s US tariff announcements. The sectors with higher exposure to the US market, like pharma & IT, have witnessed some selling pressure,” said Vinod Nair, head of research, Geojit Investments Limited, told news agency PTI.
