US to finalise new tariff architecture before India signs trade deal

India is awaiting clarity on the new tariff architecture by the US before signing the trade deal, said a top government official on Monday. "Whenever the US is ready with the new tariff architecture, India will sign it," a top official said, underlining that the two countries are engaged in finalising other contours of the bilateral trade agreement.

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The comments come in the wake of the US Supreme Court striking down the reciprocal tariffs levied by US President Donald Trump on February 20. Prior to that, India and the US had announced on February 1 that they had agreed on the initial framework of the bilateral trade agreement under which the penalty tariff of 25% imposed by the US on Indian exports would be removed and the reciprocal tariff reduced to 18% from 25%.

However, since the US Supreme Court ruling, the reciprocal tariffs don't apply. Malaysia, on March 15, said its reciprocal trade agreement with the US is null and void after the ruling.

Commerce Secretary Rajesh Agarwal on Monday said that India remains engaged with the US side for a mutually beneficial trade agreement.

However, sources said that while the March deadline for signing the deal will no longer apply, India will sign the trade deal whenever the US has finalised the new tariff architecture.

In the meantime, India is discussing issues around non-tariff barriers with the US as well as Section 232 tariffs, which include a 50% tariff on aluminium and steel exports to the US.

The US has recently also launched probes under Section 301 for structural excess capacity and production and forced labour in various countries, including India. India has just received the notifications for the launch of the investigations and is reviewing them. “The deal will take care of the Section 301 investigations,” the source explained

Meanwhile, India and Canada are also likely to hold the first round of negotiations for the Comprehensive Economic Partnership Agreement in April or May. “Both sides are already in virtual negotiations. The first round of physical negotiations will take place in April or May,” Agarwal told reporters.

India and Canada signed the terms of reference for the CEPA on March 2, announcing the launch of formal negotiations between the two countries with the aim of expanding bilateral trade to Rs 4.65 lakh crore by 2030.