AsianFin -- India is seeking to reach a trade agreement that allows the upcoming tariffs imposed by the United States much lower than its Asian peers which have received letters dictating new reciprocal tariffs starting next month, according to a report on Thursday.
Credit：Freepik
India is seeking a trade deal at more favorable tariff rates than U.S. President Donald Trump had agreed with Indonesia and Vietnam, Bloomberg learned from officials in New Delhi. India is hoping for a tariff that would give it a competitive advantage against its peers in the region, according to the officials. It was said that New Delhi believes the U.S. doesn’t view it as a transshipment hub like Vietnam and other Southeast Asian nations, and negotiations so far suggest the tariff rate that India is facing would be better than those countries.
India’s negotiating team would be hoping to bring the tariff down to below 10%, the report cited Soumya Kanti Ghosh, chief economist of State Bank of India, the largest government-owned lender, and a member of the prime minister’s Economic Advisory Council. “And in the bargain, the US will expect significant concessions for its goods when they decide to enter India,” Ghosh said. While New Delhi is unwilling to open up the agricultural and dairy sectors, it may make concessions in non-agricultural sectors, said the economist.
Trump on Tuesday said he reached a trade deal with Indonesia that will charge a 19% tariff on the Southeast Asian economy, and stressed the United States exports will be offered unprecedented access. “We will pay no tariffs. So they are giving us access into Indonesia, which we never had,” Trump spoke with reporters outside the White House. “That’s probably the biggest part of the deal. And the other part is they are going to pay 19%,” he said.
In a subsequent social meda post, Trump said Indonesia will pay the U.S. a 19% tariff on all goods exported to the U.S., while U.S. exports to the country “are to be Tariff and Non Tariff Barrier FREE.” “If there is any Transshipment from a higher Tariff Country, then that Tariff will be added on to the Tariff that Indonesia is paying,” he added.
Trump in the post revealed he finalized the deal after speaking with Indonesia’s president Prabowo Subianto, and Jakarta agreed to open up its “entire market” to the U.S. “This landmark Deal opens up Indonesia’s ENTIRE MARKET to the United States for the first time in History,” Trump wrote in the post.
If the tariff rate Trump announced is accurate, Indonesia would become the first trading partner receiving the Trump administration’s cut in planned tariffs through trade negotiations by August 1. The 19% tariffs are inevitably lower than those Trump threatened last week.
Trump on July 7 shared screenshots of form letters to the leaders of 14 countries, informing them of new reciprocal tariffs effective on August 1. Among the letters Trump said he would impose 32% tariffs on Indonesia. The 32% tariff rate was higher than the current baseline 10% level and the same with the reciprocal tariffs for Indonesia Trump announced on April 2, a date the president proclaimed “Liberation Day”.
Trump later Tuesday floated "probably five or six" deals following the trade pact with Indonesia. A day later, the president eyed some trade deals to be made including that with India.
"We have some pretty good deals to announce," Trump told reporters at the start of a meeting with Bahrain's Crown Prince Salman bin Hamad Al Khalifa at the White House. He noted a possible trade deal with India. “We have another deal coming up, maybe with India,” he said, without providing details.
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