Talks on to mutually lower duties on key items as India looks to cushion Trump tariff impact

India and the United States are negotiating a list of items on which tariffs can be lowered by both sides under a proposed trade deal to secure some exemptions from President Donald Trump’s reciprocal tax, an industry source said on April 4.

While India sees room to reduce taxes on certain farm goods such as American almonds and pistachios, in return, New Delhi is seeking lower duties on exports such as automobile parts and essential medicines.

“Trade teams of both nations are in touch to agree on a list of items to lower tariffs. This was also discussed during the last round of talks held last month,” the source said, referring to the negotiations held in Delhi ahead of the Trump’s announcement.

Before he unveiled his “Liberation Day” tariff plan on April 3, Trump also announced a 25 percent levy on a range of automobile parts, which will come into effect from May 3.

Trump announced a 26 percent tariff on Indian goods, days after the two sides concluded a round of talks. Assistant US trade representative Brendan Lynch was in New Delhi from March 24-29 and during the talks, India sought an exception from Trump’s tit-for-tat tariff plan.

Though pharmaceuticals were kept out in this round, the US President has indicated that he may separately announce steeper tariffs on the sector in the near-future.

India imports bulk of its pistachio and almonds from the US. New Delhi levies a basic customs duty of Rs 35 a kilogram on almonds and a 10 percent levy on pistachio.

“When commerce minister Piyush Goyal went to the US with a delegation in early-March, a list of items was given to negotiate, which is what is being worked on now,” the source added.

The negotiations are part of the talks for a Bilateral Trade Agreement (BTA), the first tranche of which is expected to be agreed upon by the fall of this year.

More items may enter the discussion as talks progress, sources said.

While an upfront exemption is now off the table, India’s ability to lower tariffs on US goods may be key to shielding the country from Trump’s reciprocal levy of 26 percent.

Moneycontrol reported on April 3 that India is likely to negotiate under section 4C of the executive order that allows room for exemptions on reciprocal tariffs.

Section 4C of the executive order says,, “Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.”

India ranks tenth among the top nations that export to US, at $91 billion in 2024, with Mexico, China and Canada occupying the top three positions.

The US is India's top export destination, and its fourth-largest source of imports.