India to Consider Significant Tariff Cuts on U.S. Imports in Bid to Avoid Reciprocal Tariffs

In a major development for international trade, India has expressed willingness to cut tariffs on over half of the U.S. imports worth $23 billion in the first phase of a trade agreement. This deal is aimed at mitigating the impact of reciprocal tariffs imposed by the United States, which have threatened to disrupt markets and global trade.

According to two government sources familiar with the matter, India is prepared to reduce tariffs on 55% of U.S. goods that are currently subject to duties ranging from 5% to 30%. The goods involved include a wide array of products, with India potentially scrapping or significantly lowering tariffs on many of them.

This decision comes as India seeks to address the growing trade tension with the United States, following U.S. President Donald Trump’s threats to impose worldwide reciprocal tariffs starting April 2. In an internal analysis, the Indian government warned that such tariffs would impact 87% of India’s total exports to the U.S., which are valued at $66 billion.

India’s trade deficit with the United States currently stands at $45.6 billion, with the U.S. averaging a trade-weighted tariff of about 2.2%, in contrast to India’s 12% average tariff. The Indian government is keen to strike a deal with the U.S. before the announcement of reciprocal tariffs, which would impact several sectors, including pharmaceuticals, automotive exports, and machinery.

India’s consideration of tariff reductions is seen as part of its strategy to secure trade relief from reciprocal taxes. However, sources caution that the tariff cut proposal is still under discussion and could include sector-specific adjustments or even negotiations on a product-by-product basis.

The move is significant as it highlights India’s delicate balancing act in international trade negotiations, especially with the Trump administration. U.S. officials, including U.S. Commerce Secretary Howard Lutnick, have encouraged India to pursue broader tariff cuts to promote stronger trade ties between the two countries. However, India remains cautious and committed to protecting its national interests.

India has made it clear that certain high-tariff products, such as meat, maize, wheat, and dairy, will remain untouched, with a focus on sectors like automobiles, almonds, pistachios, and quinoa where tariffs could be eased.

Despite some mixed reactions, the potential tariff cuts could represent the most significant trade shift between the two nations in years, and set the stage for a potentially landmark deal to improve trade relations.