US President halts trade talks amid tariff war; no official word yet, says India

US President Donald Trump has ruled out the possibility of trade negotiations with India until the tariff issue is resolved. However, India has not received any communication from the US regarding the halting or cancellation of trade negotiations, said an official. A US team, headed by Brendan Lynch, is scheduled to visit New Delhi from August 25 to 29 for the sixth round of talks, the official said.

"No, not until we get it resolved,” Trump replied to a question on whether he expected increased trade negotiations with India after doubling the tariff to 50 per cent. He was addressing reporters at the Oval office on Thursday.

According to sources, the sixth round of talks was expected to focus on ironing out outstanding issues in key sectors, including agriculture, dairy, steel, aluminium and automobiles. While the US wants access to the agriculture and dairy sectors, India remains steadfast in maintaining high tariffs in the sensitive sectors which employ millions of people.

India and the US announced a mutually beneficial bilateral trade agreement in February during Prime Minister Narendra Modi's US visit with the aim to double bilateral trade to $500 billion by 2030. Both sides committed to finalise the first tranche of the agreement by October-November. However, after the announcement of reciprocal tariffs by Trump in April, both the countries were actively negotiating an interim deal to escape the impact of tariffs. The sources said while the negotiators from both sides had struck an agreement by July, the US side was waiting for an approval from Trump, which didn't come.

To worsen the situation, Trump slapped 25 per cent tariffs on imports from India, effective from August 7, followed by an additional duty of 25 per cent, effective August 27, over New Delhi's oil purchases from Russia.

Soon after Trump's penalty, the Ministry of External Affairs (MEA) said targeting of India was "extremely unfortunate". The MEA termed the US actions as "unreasonable and unjustified" and asserted that India would take all actions necessary to protect its national interests. Regarding the import of Russian oil, the MEA clarified that India's imports were based on market factors and conducted with the overall objective of ensuring the energy security of 1.4 billion people of the country.

However, the US said India's oil purchases from Russia undermined its efforts to counter Moscow's "harmful activities" in Ukraine.

The US duties on India are the highest and way more than other Asian countries such as China (30%), Pakistan (19%), Vietnam (20%), Indonesia (19%) and Bangladesh (20%). The tariffs will make Indian goods costly in the US and lead to a decline in exports, which touched nearly $87 billion last financial year. The textile, apparel, gems and jewellery sectors would be among the worst affected due to the US tariffs. Several exporters have reportedly received calls from their US buyers asking them to stop shipment or to renegotiate the prices as the 25 per cent tariffs announced on July 31 came into force on Thursday.