India-US trade pact likely has safeguards to keep lower tariffs intact, sources say

Prime Minister Narendra Modi with US President Donald Trump

• India added safeguards to US trade deal to maintain lower tariffs despite legal changes.
• US tariffs on Indian goods drop to 18%, Indian tariffs on US goods to zero
• Framework agreement marks first stage of broader Bilateral Trade Agreement

Did our AI summary help?

India has likely included safeguards in its trade agreement with the United States to ensure that lower reciprocal tariffs remain in effect, regardless of upcoming legal challenges or changes in policies in the US, government sources said.

“We have put protections in place to ensure that any changes in policy or impending legal decisions do not impact our agreement that has lowered tariffs on Indian exports,” the sources said.

The need for safeguards is reinforced by President Donald Trump’s recent actions, including raising or threatening tariffs on countries such as the European Union even after striking trade agreements.

And, also given that the US Supreme Court is considering challenges to the legality of Trump's broad tariff regime, with lower courts having already questioned whether he exceeded his authority under the International Emergency Economic Powers Act (IEEPA).

Trump has warned that even if the courts strike down parts of his tariff measures, he would use alternative powers to impose, maintain or raise duties.

The US President announced the trade deal with India on Truth Social on February 2, saying the agreement would significantly roll back the reciprocal tariffs imposed since mid-2025.

As part of the deal, he claimed that US tariffs on Indian goods would be cut to 18 percent from 50 percent, while duties on American products imported into India are expected to fall to zero.

For now, India and the US have agreed to a “framework agreement,” marking the first stage of a broader Bilateral Trade Agreement (BTA).

Both sides are working to conclude the technical processes related to documentation, with a joint statement outlining the broad contours of the agreement expected this week.

The terms of the framework pact are expected to be merged into the broader BTA once it is finalised, sources added.