Trump vs Farmers: Why the India-US Trade Deal is on the Edge

The temporary suspension period of the reciprocal tariffs imposed by the United States on India and several other countries is set to expire on July 9. While the US has reached agreements with some countries, India remains one of the few with whom a deal has not yet been finalized.

On Saturday, US President Donald Trump said that he has sent letters to 12 countries, clearly stating that they either have to agree to a deal or face tariffs. India is likely one of these countries. The letters provide information regarding the tariffs to be imposed on these countries.

So far, the US has made deals with the UK and Vietnam. It has also made considerable progress in reaching an agreement with China. Donald Trump himself has confirmed these deals. However, there is still no agreement with India. Despite several rounds of discussions between the two countries, no conclusion has been reached. India does not appear to be in the mood to strike a deal under pressure. Union Commerce Minister Piyush Goyal said in a program two days ago that India has never accepted any trade agreement under pressure of any kind. Speaking to The Times of India, he said, “We must ensure that this is a fair deal that gives us better opportunities against our competitors. But we are not working under any deadline pressure; rather, we are working in the national interest.”

No Compromise on Farmers’ Interests

Discussions are ongoing between India and the US regarding a Free Trade Agreement (FTA), but the biggest obstacle remains India’s agriculture and dairy sectors. The US wants India to reduce tariffs on agricultural products like maize and soybean, as well as dairy goods, but India is not willing to do so.

Union Minister of Commerce and Industry Piyush Goyal made it clear on this issue that the interests of farmers are paramount for the Modi government. He said, “Under the Modi government, farmers’ interests are of the highest priority. In all the trade agreements we have signed so far — with the UK, Australia, Mauritius, EFTA, and the UAE — the interests of farmers have been fully protected.” The US wants agriculture to be a central part of the FTA, while India is avoiding giving any concessions in this area. The government believes that reducing tariffs on dairy and certain crop products would negatively impact small farmers and the domestic dairy industry.

What Else Does India Want?

One key point in the ongoing FTA talks between India and the US is that India wants protection against future changes in tariffs and sectoral restrictions. The government wants India to receive better tariff benefits compared to countries like China and Vietnam in the agreement with the US, but it also seeks a guarantee that the US will not take any unilateral sectoral actions or make tariff adjustments in the future.