India Engaged with US to Finalize Trade Deal Despite Tariff Setbacks: Jaishankar

External Affairs Minister S. Jaishankar said on Wednesday that while the full impact of new reciprocal US tariffs on Indian imports remains uncertain, India is actively working with the US to conclude a bilateral trade agreement.

Speaking at the News18 Rising Bharat Summit, Jaishankar addressed the recent 26% reciprocal tariff imposed by the US under former President Donald Trump’s directives. The move has rattled markets, with Indian shares dipping and the Reserve Bank of India cutting interest rates for the second time this year.

“Our strategy has been clear from the start—we decided to engage the Trump administration early to work towards a trade agreement by the fall,” said Jaishankar, emphasizing India’s proactive approach in response to the tariff escalation.

Prime Minister Narendra Modi and Trump had earlier agreed in Washington to finalize the first phase of the agreement within the year. Last month, US Assistant Trade Representative Brendan Lynch led a delegation to New Delhi to iron out negotiation details.

Jaishankar noted that both sides have maintained a “very open” and “constructive” dialogue. “India is the only country to have reached an understanding in principle with the US under the Trump administration,” he said.

He added that the push for a bilateral deal has been India’s objective since Trump’s first term, though it didn’t materialize then. The Biden administration, in contrast, had leaned more toward multilateral frameworks like the Indo-Pacific Economic Framework for Prosperity (IPEF).

“Working something out bilaterally is not negative or unwanted—it aligns with India’s long-term goals,” Jaishankar said.

On whether a trade deal can be concluded by fall, Jaishankar questioned the prolonged nature of trade negotiations with other countries. “I’ve always wondered why it takes so long. We’ve had more discussions with the US in six weeks than with the EU in two years,” he remarked.

He stressed the importance of viewing trade strategy from an Indian lens. “Every country is tariffed. We’re not reacting just to another president’s decisions. Our past FTAs with ASEAN, Japan, and Korea have led to trade deficits. Our export potential lies to the west—in West Asia, Europe, the UK, the US, and Latin America.”

Regarding ongoing talks with the EU, Jaishankar said momentum is building. “Europe has sent a strong signal that they want to move forward. We’ve reciprocated and aim to conclude the FTA this year,” he said, referencing a shared goal set by PM Modi and European Commission President Ursula von der Leyen.