US delegation’s New Delhi visit set to boost trade talks as Trump tariffs loom

New Delhi: As the deadline for US President Donald Trump’s reciprocal tariff plan approaches, a US delegation led by assistant US trade representative Brendan Lynch is set to arrive in New Delhi on Tuesday for bilateral trade discussions.

Trump is expected to announce the reciprocal tariff plan on 2 April for all countries, including India, as part of efforts to correct the US's trade imbalance. The US currently has a trade deficit with India and several other countries.

Lynch, who oversees trade relations with South and Central Asia, will be in India from 25-29 March for meetings with Indian officials, a US embassy spokesperson said.

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The visit of the US team is seen as a sign of Washington’s commitment to fostering a balanced and productive trade relationship with India, as both nations have agreed to finalise a bilateral trade agreement by the fall of 2025.

India also views this as an official channel to advance discussions that New Delhi had with its counterparts during a high-level delegation led by commerce minister Piyush Goyal from 4-8 March.

Growing the pie

Commenting on the development, Goyal said, "As directed by the leaders of the two countries, India remains committed to working with the US in trade and economic domains to enhance prosperity and innovation in both India and the US, and to deepen supply chain integration between the two countries."

“We look forward to productive and constructive discussions with the incoming U.S. delegation to expand and deepen our bilateral trade and economic ties in a mutually beneficial manner,” Goyal added.

The proposed BTA aims to expand bilateral trade from $200 billion to $500 billion by 2030. As Mint reported on 18 February, India is seeking mutual tariff reductions from the US. With negotiations progressing in a positive direction, both nations have agreed to lower tariffs to benefit each other and facilitate trade expansion.

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“Both countries now have a better understanding of each other’s concerns as they work towards finalising the contours of the bilateral trade agreement. The visit of the US delegation will scale up the talks and resolve the sticky issues,” said a senior government official who did not wish to be named.

Key concerns of the US include high tariffs on agricultural products, an uneven playing field in the e-commerce sector, and non-tariff barriers restricting access for its goods and services.

Duty cuts underway

India has already lowed some duties, including tariffs on motorcycles, benefiting US premium bikemaker Harley Davidson, as well as bourbon whiskey and ethernet products, among others. The tariff on motorcycles was reduced from 50% to 30%, te duty on ethernet switches was cut from 20% to 10%, and the tariff on bourbon whiskey dropped from 150% to 100%.

India’s exports to the US stood at $75.60 billion in FY22, and increased to $78.31 billion in FY23 before declining slightly to $77.52 billion in FY24. From April to February of FY25, exports totaled $76.38 billion, up from $70.01 billion during the same period in FY24, according to commerce ministry data.

The Global Trade Research Initiative (GTRI) has suggested that India consider absorbing Trump's tariffs while withholding concessions in other areas. According to GTRI’s founder Ajay Srivastava, Trump's trade policies, though temporary, could have a significant impact, as seen in the previous trade war that began in March 2018 and led to a $762-billion surge in US goods imports between 2017 and 2023.

“A new trade war under Trump could be even more damaging, especially if retaliatory counter-tariffs escalate tensions further, potentially harming partners like India,” Srivastava said.

‘Choose strategy over tit-for-tat’

To avoid such a scenario, GTRI recommended that India refrain from direct retaliation and instead adopt a strategic approach. “Rather than engaging in a tariff war, India should gradually reduce its dependence on the US by avoiding preferential treatment in sectors such as oil purchases, defense deals, and other key areas. The focus should be on strengthening domestic industries to prepare for the next phase of global trade,” Srivastava said.

Also read: Trump's tariffs cloud India's March exports

However, in a fact sheet on Fair and Reciprocal Tax signed by Trump before his meeting with Indian Prime Minister Narendra Modi on 13 February, Washington highlighted tariff disparities, noting the US applies a 5% MFN (most-favoured nation) tariff on agricultural goods, while India’s is 39%. It also highlighted India’s 100% tariff on American motorcycles, compared to the US’s 2.4% tariff on Indian motorcycles, as an example of imbalance in market access.

After meeting Modi at the White House on 13 February and calling him a friend, Trump, who had earlier labelled India a “tariff abuser”, repeated his complaints at a joint press conference about the country’s trade policies, calling India's import duties “very unfair and strong”, and made it clear that India would not be spared from his tariff hikes on key trade partners.

Minor tariffs on major imports

Commerce ministry data shows that import duties on several high-value American products into India are negligible. For instance, in FY24, petroleum crude—the US’s top export to India at $5.03 billion—was taxed at just ₹1 per tonne, making it one of the lowest-taxed imports despite its high trade value.

Other key exports from the US, including coal ($4.2 billion in FY24), large aircraft ($1.94 billion), and liquefied natural gas ($1.41 billion), carry a 2.5% tariff, ensuring steady trade in the energy and aviation sectors.

With a $35-billion merchandise trade surplus in FY24, India wants to avoid US tariff hikes on key exports such as garments, electronics, engineering goods and pharmaceuticals. Exports in these four categories rose from $38.84 billion in FY22 to $46.43 billion in FY24.