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India, US Nearing Temporary Trade Deal to Avoid Tariffs and Strengthen Economic Ties

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Business Honor
01 July, 2025

India and the US are finalizing a temporary trade deal to avoid tariffs and boost economic ties.

India will reportedly sign a short-term trade deal with the US in an attempt to beat President Donald Trump's retaliatory tariffs. The agreement will be a major milestone in the escalating economic relationship between the two nations and hopefully open the door to a full bilateral agreement later this year. The trade talks coincide with the expiration of the 90-day tariff truce imposed in April. The temporary pact is to correct major imbalances in trade and avoid imposition of tariffs on Indian products, with a tariff rate of 26% versus 52% on US products. The action is set to ease finance tensions while establishing a foundation for a comprehensive, long-term trade deal. Both countries have said that the complete deal could be agreed on by the fall, with an emphasis on reducing tariffs and increasing mutual trade.

US and Indian officials have indicated that this agreement will include various goods and services. Significantly, India has managed to protect its food grain markets, especially dairy and wheat, from tariffs. The Indian dairy industry, which employs more than 80 million people, has been a sensitive issue in talks, with India wanting protection against foreign competition. In addition, India has pledged to lower its trade surplus with the US by stepping up import of natural gas from the nation, further promoting bilateral trade relations.

White House Press Secretary Karoline Leavitt also confirmed that the agreement is likely to be concluded shortly, and President Trump reiterated that the US is negotiating a "very big deal" with India. As both nations continue with the negotiation of trade, the results of these negotiations will heavily influence both economies as well as their trade relationship in the coming years.