US and Indian trade negotiators were working to finalize a tariff-reduction deal ahead of President Donald Trump's July 9 deadline, though key disagreements over U.S. dairy and agricultural products remained unresolved, according to sources cited by Reuters.
This came after Trump announced an agreement with Vietnam that cuts U.S. tariffs on many Vietnamese goods to 20% from his previously threatened 46%. Trump said that U.S. products could enter Vietnam duty free, but details were scant.
Trump has also threatened a 26% duty on Indian goods as part of his April 2 "Liberation Day" reciprocal tariffs which were temporarily lowered to 10% to buy time for negotiations.
India's Commerce Ministry stated that a trade delegation from India remained in Washington a week after arriving for talks that began last Thursday and Friday, according to sources cited by Reuters.
They may stay longer to conclude a deal, but without compromising on key agricultural and dairy issues, the sources said, adding that it was unacceptable to lower tariffs on genetically modified corn, soybeans, rice and wheat grown in the U.S.
Prime Minister Narendra Modi's government "doesn't want to be seen as surrendering the interests of farmers - a strong political group in the country," one of the sources said.
However, India is open to lowering tariffs on walnuts, cranberries and other fruits, along with medical devices, autos and energy products, the source said. A U.S. source familiar with the talks said that there were "indications that they are close" and negotiators have been told to prepare for a potential announcement.
The source added that "there's been intense and constructive effort to close a deal. I think both sides understand the strategic importance, beyond the economic importance, of closing a deal."
Trump echoed similar views on Tuesday, telling reporters aboard Air Force One that he could strike a deal with India to reduce tariffs for both nations and support U.S. companies in accessing India’s 1.4 billion-strong consumer market.
However, he expressed skepticism about a potential agreement with Japan, suggesting he might impose tariffs of 30% or 35% on Japanese goods significantly higher than the 24% duty he announced on April 2. Japan, meanwhile, is aiming to reduce separate 25% tariffs on automobiles and steel that Trump had previously implemented.
(With agency inputs)
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