Countdown to the End of the 90-Day Tariff Pause: Where Does India Stand Now?

In 2025, India held numerous rounds of discussions with the US to negotiate a favorable trade deal. A formal trade agreement between the two countries has been under deliberation for several years; however, the momentum has gained a notable pace since February 2025.

As the 90-day pause on United States (US) tariffs draws to a close, India’s key industries are bracing for potential disruptions in the global trade landscape. Since the US announced its tariff measures on April 2, 2025, India has engaged in multiple rounds of dialogue with the White House in an effort to secure more favorable trade terms.

Following Donald Trump’s inauguration on January 20, 2025, India—like many other major economies—anticipated sweeping changes in bilateral relations. In a proactive move, India’s Prime Minister Narendra Modi visited Washington, D.C., in February 2025, aiming to reinforce the strategic India–US partnership and advocate for trade terms beneficial to India.

Despite these efforts, negotiations failed to yield the desired outcome. The Trump administration proceeded with the imposition of both a base tariff and a reciprocal tariff on Indian exports, raising concerns across Indian trade and industry circles.

US-Vietnam trade deal sends warning signals to Indian exporters: GTRI

The latest trade agreement between the US and Vietnam, announced on July 2, 2025, is expected to have wide-ranging implications across Asian export markets. Initially, in early April, Trump introduced a 46 percent tariff on Vietnamese goods as part of a broader reciprocal tariff policy targeting multiple countries. However, this rate was later reduced to 10 percent to allow room for negotiations. For now, Indian exporters are urged to proceed cautiously, according to a report by the Global Trade Research Initiative (GTRI).

ALSO READ: GTRI Cautions India on Trade Shortcuts Amid Tariff Tensions

Under the deal, Trump has introduced a uniform 20 percent tariff on all Vietnamese exports to the US. This move threatens to disrupt Vietnam’s US$135 billion export industry and may effectively undo over two decades of progressive trade liberalization.

The current agreement replaces the 2000 Bilateral Trade Agreement (BTA) between the US and Vietnam, which had granted Vietnamese products preferential tariffs ranging between two percent and 10 percent. With this change, key export sectors such as textiles, footwear, seafood, and furniture—once the pillars of Vietnam’s rapid export growth from US$800 million in 2001 to more than US$135 billion—are set to lose their competitive edge.

Source: ITC Trade Map

The GTRI noted that Indian exporters, especially those viewing Vietnam as both a competitor and a partner in regional value chains, must consider the strategic and cautionary lessons from this development.

US-Vietnam great deal of cooperation

Trump unveiled the “Great Deal of Cooperation” on his Truth Social platform, claiming that Vietnam would now provide the US with “total access” to its markets. In exchange, Vietnamese exports to the US will face a 20 percent duty, reduced from an initially proposed 46 percent, but still significantly higher than the rates under the earlier BTA. While Hanoi has confirmed an agreement on reciprocal tariff measures, details on the final terms remain undisclosed.

According to the Agence France-Presse (AFP), the new agreement also imposes a steep 40 percent tariff on products routed through Vietnam but originally manufactured in third countries like China. This clause is seen as a measure to counter transshipment practices aimed at bypassing US trade barriers. However, trade analysts have flagged potential violations of World Trade Organization (WTO) rules, as such routing does not alter the origin status of goods.

For India, the timing of this development is particularly significant. As trade negotiations with the US near completion, the GTRI has advised Indian negotiators to take note of Vietnam’s experience, especially the dangers of abrupt tariff revisions, ambiguous rules of origin, and the risks of inflexible duty structures.

With the US redefining its trade priorities in the Asia-Pacific region, Indian policymakers and exporters are being encouraged to remain vigilant and responsive. The GTRI made a note that the vulnerabilities exposed by the Vietnam deal could help India steer clear of similar setbacks in its own trade strategy.

India-US BTA negotiations

According to the latest media reports, India and the US are nearing the conclusion of a BTA, with a formal announcement expected before the expiry of the 90-day suspension on tariff measures. As of July 3, 2025, trade negotiations are actively underway in Washington, D.C., with media speculation that a “mini-trade deal” could be finalized within the next 48 hours. Both countries’ trade teams are reportedly in the final phase of discussions.

While neither government has officially confirmed the details of the BTA negotiations, multiple reports indicate that the US is pushing for broader market access to India’s agricultural and dairy sectors. However, given that agriculture remains a cornerstone of the Indian economy—employing over 50 million people as of 2025—India is expected to approach this demand with caution.

Dr. Ajay Srivastava, founder of the GTRI and a former officer of the Indian Trade Service, has advised against any abrupt tariff reductions in favor of the US. He emphasized that India must evaluate the full spectrum of implications that such changes could have on its critical sectors before finalizing any trade commitments.

India’s export size and trade relations with the US

As of 2024, India ranks 18th among the world’s largest export economies. The country has accelerated its manufacturing activities, emphasizing the production of electronic components, defense equipment, and pharmaceutical products.

Source: ITC Trade Map

While India’s global export share remains modest, it is growing steadily. A key contributor to this momentum is India’s trade relationship with the US.

As of FY 2024-25, the US continues to be India’s top export market, accounting for 18.3 percent of India’s total exports in 2024. Bilateral trade with the US is also strongly favorable for India, with a trade surplus exceeding US$37.7 billion.

Source: ITC Trade Map

The data highlight that India maintains a near-even mix of trade surpluses and deficits among its top 10 trading partners. However, the trade relationship with the US is notably strong—both in terms of export volume and surplus—reinforcing the strategic importance of continued trade engagement.

The US, as the world’s largest importer, accounts for nearly 14 percent of global imports. India’s ability to maintain a significant surplus with such a dominant economy not only reflects its export competitiveness but also underscores the need to safeguard and expand this vital trade partnership in any upcoming trade negotiations.

Trump’s tariff imposition and the “global frenzy”

On April 2, 2025, Trump unveiled a comprehensive list of country-wise tariff rates. The tariff blueprint can be divided into two parts:

1. A basic 10 percent tariff is applicable to all trading partners of the US, effective April 5, 2025.
2. A country-specific reciprocal tariff, effective April 9, 2025. The US imposed a 26 percent reciprocal tariff on India.

A day after the announcement, the US president made the decision to put a temporary halt on the imposition of reciprocal tariffs for 90 days. According to Trump’s several media interviews in the subsequent days, countries were eager to strike a favorable trade deal with the US.

The trade pact with Vietnam on July 2 marks only the third such agreement announced so far, following earlier deals with the UK and China. Countries are moving swiftly to finalize trade terms with the US ahead of the July 9 deadline.

Although the Trump administration initially aimed to negotiate simultaneously with numerous trade partners, recent statements from the president and his advisors indicate a shift in strategy. They now plan to prioritize talks with major economies, while smaller countries or those unable to reach agreements may face unilateral tariff impositions.

Conclusion

India stands at a critical juncture in its trade negotiations with Washington. Despite sustained diplomatic outreach and multiple rounds of dialogue, securing a balanced trade agreement remains a complex task, particularly in light of recent developments such as the US–Vietnam deal. With the US States redefining its Asia-Pacific trade strategy and imposing tariffs under its new reciprocal framework, Indian negotiators can draw lessons from Vietnam’s experience. The country must weigh the long-term implications of tariff concessions, protect its sensitive sectors such as agriculture, and ensure clarity on rules of origin.

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