Jaishankar says India has tariff 'issues' with US: 'Both nations actively working on them'

External affairs minister S Jaishankar

External affairs minister S Jaishankar believes India’s inability to strike a deal with the US has been mainly because both the nations were unable to arrive at a common ground on several issues and this has led to the imposition of tariffs on Indian exports.

“We have issues with the US and big part of it because we have not arrived at a landing ground, the inability to reach there has led to tariffs being levied,” the minister said at the Kautilya Economic Conclave (KEC 2025).

Jaishankar revealed that New Delhi is currently negotiating on 50 percent tariffs imposed on India. However, he said the India’s “red lines have to be respected”.

“There has to be understanding with US, because it's number one market and because a lot of world has reached that understanding,” he added.

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However, Jaishankar expressed hope that tariffs won’t percolate to every dynamics of trade and said large part of the relationship with US is still “business as usual”.

The minister also said the issue of tariffs has created a dilemma for policymakers.

“When you have a world where the central consideration of trade has become tariffs, please explain to me where comparative advantages and competitive advantages go,” he pointed out.

VIDEO | Delhi: On Indo-US relations, External Affairs Minister Dr S Jaishankar at KEC 2025 says, "We have issues with the United States today - mainly that we haven’t yet reached a landing ground in our trade discussions. This has led to certain tariffs being levied on us, which… pic.twitter.com/px1jUEzV5x

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“In addition, an additional tariff is being levied for our energy trade. I don't think this will percolate to every dynamics of trade. Some issues will need to be negotiated, but I would hesitate to read very much more into it than issues themselves. Large part of relationship is business as usual or more,” he said.

Jaishankar also pointed out  that India had struck trade agreements with Asia, but this has posed a challenge as many of these economies are competitive.

"And in many cases because of the supply chain nature they have also provided a pathway for China. Our focus should be on FTAs with economies that are not competitive," he said.

New Delhi and Washington, for the last few months, have been negotiating a trade deal but no consensus has been reached so far. The tensions between the two nations escalated after US President Donald Trump imposed a 50 percent tariff on Indian goods, including a 25 percent tariff for buying Russian crude oil.

Top government officials, in the last few weeks, said talks are on between the two nations to conclude the bilateral trade agreement.

Jaishankar, referring to the tariff issue, said rules-based international order has been “weakened” in recent times, even “discarded” at times.

This has changed the way nations make their key decisions. “We have seen economically that cost may not be any longer a definitive criterion, but ownership, security reliability resilience is equally important, Jaishankar said.

This has forced a revisit of political “alliances and understandings”, he said. Moreover, Jaishankar said, the global needle has move towards competition.

“In a few cases, in those of major polities, that their belief in balance of power is probably much less. They think they may not need the rest of the world as much as they needed before. So, if they have margins of power, they are prepared to exercise that power in pursuit of their policies and actions. Therefore, we have overall seen the global needle move towards competition.”

So, we aren’t just revisiting the basics of politics we are also revisiting the basics of economics, he added.

Jaishankar said India's challenge is to build manufacturing. "...we had lost decades as far as manufacturing was concerned, he said, adding the country needs to focus on both advanced and orthodox manufacturing and get optimal mix of it.