US May Sweeten Trade Deal With 16–18 PC Reciprocal Tariffs

Chennai: Amid rising tensions with China, the US is likely to sweeten its trade deal with India by reducing bilateral tariffs to 16-18 percent, lower than some Asian peers.

China’s tighter control over rare earth exports and the deepening US-China trade war are forcing Washington to rethink its strategy with allies as it looks for reliable partners to build alternative supply chains.

US Treasury Secretary Scott Bessent recently said that Washington expects support from India and its allies at a time when tensions are rising between the US and China.

Bessent said Washington was already in contact with its allies. “We’ll be meeting with them this week, and you know, I expect us to have significant global support from the Europeans, the Indians, the democracies in Asia,” he told Fox News Business.

As part of building ties with allies, including India, the US appears willing to reduce reciprocal tariffs to 16-18 percent. “The US likely offers 16-18 percent tariff access, higher than 15 percent for the EU and Japan, but below 20 percent for Vietnam,” GTRI said. Most of India’s Asian peers, except China and Myanmar, have tariffs in the 19-20 percent range.

But the US is yet to make any commitment to respect India’s red lines, including agriculture, dairy, digital commerce, e-commerce and intellectual property.

Moreover, no deal can make India competitive without removing penalty tariffs on Russian oil imports. Since the Trump administration has already cited India’s oil imports from Russia in lawsuits, it will be difficult to back away from the penalty tariffs until the court order arrives, according to GTRI.

Alternatively, if India stops imports from Russia under pressure from the US, it will not go well politically for the government. Therefore, there are many dead ends in the game.