India-US Trade Deal Likely To Retain Tariff Safeguard Amid Uncertainty Over Future US Duties

The proposed India-US trade agreement is likely to retain a tariff safeguard included in the framework agreed by both countries in February, according to a government official. The provision would allow either side to revise its commitments if the other country changes previously agreed tariff terms, Moneycontrol reported.

The safeguard is intended to ensure that concessions made by India do not remain open-ended if Washington subsequently alters its duty structure. The February 6 joint statement had already provided for such reciprocal action if agreed tariff arrangements were modified.

Tariff Safeguard to Remain in Final Deal

The provision does not prevent either country from introducing new tariffs in the future. Instead, it gives the other side the option to modify its own commitments if agreed duties are changed.

Under the February framework, India had proposed reducing or eliminating tariffs on several US industrial and agricultural products. In return, the US agreed to an 18% reciprocal tariff on originating Indian goods, with additional tariff concessions for certain products linked to the successful completion of the broader trade agreement.

However, subsequent changes in US trade policy have complicated the original arrangement, making the safeguard increasingly important for New Delhi.

India Faces Multiple US Tariff Risks

The US continues to explore additional tariff measures affecting global trade. Indian exports are already facing a 10% additional tariff under US Section 301 action related to forced-labour practices, while Washington is separately investigating structural excess capacity that could result in further duties.

India also faces uncertainty from proposed US legislation concerning Russia sanctions. The measure could potentially give the US president authority to impose tariffs of up to 100% on countries continuing to purchase Russian energy.

The pharmaceutical sector faces another potential challenge. Under a phased US tariff plan, generic medicines would remain exempt for two years before potentially facing a 100% tariff for one year and 200% thereafter.

Despite these uncertainties, India and the US continue negotiations to conclude the trade agreement. Commerce Secretary Rajesh Agrawal has said both sides remain committed to advancing the February framework.