US, India push for tariff reducing trade pact; disagreements over dairy, agriculture remain unresolved: Report

US and Indian trade negotiators continued talks on Wednesday to reach a tariff-reducing agreement before President Donald Trump’s July 9 deadline. However, disagreements over US dairy and agriculture issues remain unresolved, Reuters reported, citing sources familiar with the discussions.

The negotiations follow Trump’s announcement of a deal with Vietnam that lowers US tariffs on many Vietnamese goods to 20% from a previously threatened 46%. Trump also stated that US products could enter Vietnam duty-free, although details were limited.

Trump had threatened a 26% duty on Indian goods as part of his April 2 “Liberation Day” reciprocal tariffs, which were temporarily reduced to 10% to allow time for negotiations. Sources from India’s commerce ministry stated that the Indian trade delegation remains in Washington, having arrived a week ago for talks that commenced last Thursday and Friday.

The delegation may extend their stay to finalise a deal, but will not compromise on key agricultural and dairy concerns. It is unacceptable to reduce tariffs on genetically modified corn, soybeans, rice, and wheat grown in the US, the sources added.

One source noted that Prime Minister Narendra Modi’s government does not want to appear to be surrendering farmers’ interests, a significant political group in India.

India is, however, open to lowering tariffs on walnuts, cranberries, other fruits, medical devices, autos, and energy products, the source said. A US source familiar with the talks indicated that the sides are close to an agreement and have been instructed to prepare for a possible announcement.

The US source described the efforts as intense and constructive, highlighting the strategic as well as economic importance of closing a deal. Trump echoed this on Tuesday, saying he could reach a deal with India that would reduce tariffs for both countries and help American companies compete in India’s market of 1.4 billion consumers. 

Meanwhile, Trump expressed doubts about a potential deal with Japan, suggesting he might impose tariffs of 30% or 35% on Japanese goods, higher than the 24% duty announced on April 2. Japan is seeking reductions on separate 25% automotive and steel tariffs imposed by Trump.

(With Reuters inputs)