Tariff Tracker, May 20: A prospective India-US trade deal, Trump admin flip-flops

In the past, Trump has pointed to the trade deficit in US-India trade as a cause of concern. In 2024, the US had a $45.7 billion trade deficit with India. The US is India’s largest trading partner, while India is the US’s 10th-largest trading partner.

In the wake of Trump’s initial tariff announcements, India had made several overtures to the US, but has since presented a tougher stance on the heels of a successful US-China trade deal last week. The US President, meanwhile, has claimed several times over the last week that India has offered to “literally charge us no tariff”.

What might the proposed India-US trade deal look like?

According to the Bloomberg report, the interim deal would address opening market access for some farm products and industrial goods, while addressing certain non-tariff barriers like quality control requirements.

The second stage would entail a detailed agreement to be signed between September and November, likely focusing on the 19 areas under the terms of reference agreed by both India and the US in April, according to the report. In April, US Vice President JD Vance announced that both India and the US had “finalised the terms of reference” which would help set “a roadmap toward a final deal”.

The final stage would likely be a comprehensive agreement for which Congressional approval would be required and could be expected next year, according to the Bloomberg report.

According to an analysis by global wealth management firm Bernstein, the deal would have a positive but subdued impact on the Indian economy. While markets would welcome the announcement, a prospective deal would be unlikely to boost Indian manufacturing or long-term potential for economic growth.

What about countries that have not pursued trade deals with Trump & Co?

While the prospect of mixed signals is a characteristic of the Trump administration, over the last week, it has decided to backtrack on its stated goal to offer trade deals to “each and every country that calls up this administration to strike a deal”.

The US President, on Friday (May 16), said he would reintroduce his new tariff rates without completing trade deals with the “150 countries that want to make a deal”, simply because he does not have the time for that level of outreach. Trump had announced his tariff pause on April 9, and it is expected to end on July 31.

He said that Howard Lutnick and Treasury Secretary Scott Bessent will send out letters in the coming weeks to countries which did not enter into trade deals with the US on “what they’ll be paying to do business in the United States.”

Bessent presented a contrasting face on Sunday, when he told CNN that the Trump administration was primarily focused on trade deals with 18 key trading partners. He said that the letters would only be sent to those nations who do not negotiate in “good faith” with the US, and that their tariffs would be restored to the April 2 Liberation Day rates.

Interestingly, he also suggested that the US could impose blanket tariff rates on entire regions like Central America or Africa.