India eyes bilateral trade deal with US by fall to navigate tariff uncertainty

India's External Affairs Minister Subrahmanyam Jaishankar has said that New Delhi’s strategy to address the uncertainty surrounding the US President Donald Trump's reciprocal tariffs is to finalize a bilateral trade agreement (BTA) with Washington by the fall of this year. 

In his first comprehensive response to the US tariff policy, Jaishankar noted that India may be the only country to have reached an understanding with the Trump administration regarding a trade deal after Trump began his second term, Caliber.Az reports via foreign media. 

Jaishankar's remarks came just days after Trump’s implementation of sweeping tariffs on five countries, including India, which has triggered significant disruptions in trade and raised concerns of a potential global economic recession. India has taken a measured approach in response, with Jaishankar emphasizing that the country is actively engaged in discussions with the Trump administration to negotiate a bilateral trade agreement.

"I don't think it's possible to speak about what would be the impact, because we don't know. What is our strategy? I think that's pretty clear," Jaishankar said during the News 18 Rising Bharat Summit. "We decided that we will engage the Trump administration early on this set of issues and we were very open with them, very constructive with them as they were with us, and what we agreed to do was to try to negotiate a bilateral trade agreement by the fall of this year," he added. 

Following talks between Indian Prime Minister Narendra Modi and President Trump in Washington, D.C., in February, both parties agreed to work towards negotiating the first phase of the BTA by the fall of 2025.

"I think we are the only country after President Trump has assumed the presidency for a second time that has actually reached such an understanding in principle," Jaishankar said. 

He further explained that countries around the world are developing their own strategies in relation to the US, but India’s goal is clear: to successfully negotiate a trade agreement with the Trump administration. 

"In our case, our strategy has a goal. And the goal is to see whether it's possible to actually deal with this situation by concluding a bilateral trade agreement. And I should add that in an interesting way, this has long been our objective," he added. Jaishankar also observed that the current geopolitical situation may provide an ideal opportunity to pursue serious negotiations on a trade deal.

"However, if you look at President Trump's first term, we were actually negotiating a trade deal which could not fructify, and if one looks even at Biden's administration, we discussed trade possibilities and we ended up with the IPEF initiative," Jaishankar noted. 

In May 2022, during President Joe Biden’s first term, the US launched the Indo-Pacific Economic Framework for Prosperity (IPEF), a broad initiative aimed at fostering deeper cooperation in areas like clean energy, supply chain resilience, and digital trade among like-minded countries. Jaishankar clarified that the Biden administration was reluctant to pursue a bilateral trade agreement with India, but he emphasized that such an agreement has long been India's objective. 

"They [the Biden administration] were very averse to doing a bilateral agreement. From the Indian perspective, actually working out something bilaterally with the United States is not at all a sort of a negative or an unwanted situation," Jaishankar said. "On the contrary, it is something which has long been our objective."

On April 2, US President Donald Trump announced the imposition of customs tariffs on products from 185 countries and territories. A universal 10 per cent tariff came into effect on April 5, with individual tariffs set to take effect on April 9. Additionally, the US administration introduced a 25 per cent tariff on all imported vehicles on April 3. Trump also declared a state of emergency in the country due to the ongoing economic situation. For India, the US has imposed a 26 per cent tariff.

By Naila Huseynova