Communication channels open on both sides: Govt sources on India-US trade deal

US President Donald Trump’s decision to double tariffs on Indian goods, taking duties to as high as 50%, came into effect on Wednesday, escalating trade tensions between the world’s two largest democracies and strategic partners. Government sources told Business Today that communication channels are open between Washington and New Delhi despite the current tensions.

“Both sides have concerns on how this will play out, and both sides [are] looking to resolve,” the source said, adding that the impact of tariffs will be felt by both nations.

“Major shifts might be underway,” the source added.

The latest round of tariffs added a fresh 25% punitive duty, linked to India’s Russian oil imports, on top of Trump’s earlier 25% levy on Indian exports. This brings the total duties to 50% across a wide range of goods.

Products hit include garments, gems and jewellery, footwear, sporting goods, furniture, and chemicals, making the new rates among the steepest imposed by Washington. The measures place India alongside Brazil and China in facing some of the highest tariff regimes from the US.

The move is expected to significantly hurt Indian exporters, raising concerns about costs, competitiveness, and the broader trajectory of trade relations between the two countries.

The source further noted that the impact of US tariffs is “not as exaggerated or projected,” stressing that Indian exports are not solely dependent on the American market. “There is no panic or large distress signals at all,” the source said.

Officials added that the government remains in constant touch with industry stakeholders, who are described as resilient and experienced in weathering past challenges. A multi-pronged strategy is being worked out, focusing on export promotion, diversification, and the launch of an export promotion mission to cushion the impact of the tariff hike.

The source further noted that the impact of US tariffs is “not as exaggerated or projected,” stressing that Indian exports are not solely dependent on the American market. “There is no panic or large distress signals at all,” the source said.

Officials added that the government remains in constant touch with industry stakeholders, who are described as resilient and experienced in weathering past challenges. A multi-pronged strategy is being worked out, focusing on export promotion, diversification, and the launch of an export promotion mission to cushion the impact of the tariff hike.

The source added that India is reaching out other markets for lucrative trade deals.

Scott Bessent hopes deal soon

US Treasury Secretary Scott Bessent on Wednesday expressed confidence that Washington and New Delhi would eventually reach common ground despite President Donald Trump’s recent move to impose a 50% tariff on Indian goods. In an interview with Fox News, Bessent noted that the trade frictions extend beyond India’s purchase of Russian oil. He pointed out that negotiations on tariff issues began soon after Liberation Day, but a deal has yet to be finalised. According to him, talks were initially expected to conclude by mid-year, but delays and concerns over Russian crude imports have added layers of complexity to the discussions.

Despite the steep tariff hike, Bessent emphasised that Washington and New Delhi have too much at stake to let their trade relationship break down, stressing that as the world’s largest democracy and the world’s largest economy, the two nations are ultimately expected to find common ground.