India could face tariffs as high as 25% if it fails to finalise a trade deal with the US this week, President Donald Trump has said.
“Yeah, I think so,” he told reporters on Tuesday when asked whether Delhi would face higher tariffs in the absence of an agreement.
The US has set a 1 August deadline for India and several other countries to either reach a trade agreement or face increased tariffs.
Indian and American officials have been negotiating a trade deal for the past few months, but officials have alternated between sounding optimistic and cautious about when it will be announced.
When asked about what he expected from a potential deal with India, Trump said: “We’re going to see. India has been a good friend, but India has charged basically more tariffs than almost any other country”.
“But now I’m in charge, and you just can’t do that,” he added.
The BBC has reached out to India’s commerce ministry for a comment.
Tariffs are taxes charged on goods imported from other countries. The US president has repeatedly taken aim at India’s high tariffs, branding it a “tariff king” and a “big abuser” of trade ties.
Trump has not yet sent a letter to India setting a new tariff rate – as he has with more than a dozen other trading partners.
Back in April, Trump had announced tariffs of up to 27% on Indian goods, which was later paused.
Since then, both sides have been racing to negotiate an agreement, with officials sometimes sounding positive and at other times, measured.
“We continue to speak with our Indian counterparts. We’ve always had very constructive discussions with them,” US Trade Representative Jamieson Greer said earlier this week.
He also acknowledged that although he had earlier said a deal with India might be “imminent”, it needed to be understood that Delhi’s trade policy has been “protectionist for a very long time” and has been “premised on strongly protecting their domestic market”.
Greer added that Trump has been focused on securing deals that substantially open other markets to the US.
Agriculture and dairy are among the key sticking points for both countries.
For years, Washington has pushed for greater access to India’s farm sector, seeing it as a major untapped market. But India has fiercely protected it, citing food security, livelihoods and the interests of millions of small farmers.
Last week, Indian Commerce Minister Piyush Goyal told CNBC that the agriculture sector is sensitive for India and that it will make sure that farmers’ interests are “well protected”.
Goyal also told news agencies that India remains “optimistic” about striking a deal with Washington soon.
Speaking to Reuters, he said that India was making “fantastic progress” in talks with the US and that he hoped they were able to “conclude a very consequential partnership”.
Until recently, the US was India’s largest trading partner, with bilateral trade reaching $190bn in 2024. Trump and Modi have set a target to more than double this figure to $500bn.
India has already reduced tariffs on a range of goods – including Bourbon whiskey and motorcycles – but the US continues to run a $45bn (£33bn) trade deficit with India, which Trump is keen to reduce.
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