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India-US trade deal: The US tariffs on Indian goods stood around 2-3 per cent under the standard Most-Favoured-Nation (MFN) rates, but after President Donald Trump’s Liberation Day tariffs (mid/late 2025), the rates went up to 25 and then to 50 per cent total effective duty on many Indian products. When US President Donald Trump announced that Washington would lower reciprocal tariffs on Indian goods from 25 per cent to 18 per cent on Monday, the move was widely projected as a diplomatic and economic breakthrough. Trump, in his Truth Social post, said the United States would charge a reduced tariff while India would “move forward to reduce their tariffs and non-tariff barriers against the United States, to ZERO.”

While the tariff cut was welcomed widely, the unequal structure of the agreement has raised a fundamental question: is India celebrating a strategic win, or accepting an uneven trade compromise? How fair is it that India reduces tariffs to zero while the US keeps them at 18 per cent?

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This question is of great importance right now because trade deals are not judged only by immediate relief but by what they signal for future negotiations. At a time when global trade is increasingly shaped by tactics and geopolitical pressures, the terms India accepts today are of immense significance.

Addressing why the US continues to levy an 18 per cent tariff despite India’s zero-access commitment, Dr. Sumit Kumar, Assistant Professor, International Relations, at Manipal University, said that reciprocity in trade is rarely arithmetical. According to him, the US retaining an 18 per cent tariff reflects domestic political economy constraints, legacy protection for sensitive sectors, and leverage preservation rather than a rejection of reciprocity.

“India’s zeroing of tariffs and non-tariff barriers should be read as long term strategic market access commitment, not immediate transactional symmetry. In return, India secures predictability, supply chain continuity and insulation from future tariffs. In an era of rising uncertainty, stable trade relations itself has become an asset, and India has negotiated for certainty rather than symbolic parity,” he added.

However, Dr. Siddharth Shukla, Assistant Professor of Economics, Manipal University, cautioned that the tariff reduction is conditional and incomplete.

“Reduction of tariff from 25 per cent to 18 per cent is a welcome step from the USA, but this step is not comprehensively conveyed as it is subject to certain major conditions. One of the most significant of these is the complete cessation of importing crude oil from Russia and substituting the same with USA-occupied Venezuela and the USA itself. It is done to weaken the finances of Moscow, which in turn shall place pressure on Russia in the ongoing war with Ukraine,” he said.

Dr. Shukla added that India’s investment in the Chabahar port also plays a dominant role in not reducing the tariffs. He further added that the reduction is tariff is also subject to increasing the share of local American goods in the USA’s export.

From a political lens, Akshaya Saroha, Ph.D., Political Science and International Relations, Assistant Professor at IMS Unison University, views the tariff cut as a reflection of the US’s hegemonic trade posture.

“The tariff has been slashed by the United States from the standpoint of a trade hegemon. This follows from its arms-twisting approach in its trade diplomacy, wherein it expects the trade partner to become subservient. India has been pressed to commit to buying American petroleum, defense, and agricultural products. This sort of tariff-threat diplomacy, which defines the Trumpian presidency, shows how, in the garb of trade, the fair trade practices and international regimes are being scuttled,” Dr. Saroha said.

On whether accepting such terms sets a precedent, Dr. Sumit Kumar frames the deal as strategic risk management. Faced with extreme tariff threats, India prioritized economic shock absorption over rhetorical parity.

“The deal safeguards Indian export sectors deeply embedded in the US market while preventing escalation into a broader trade conflict. As our External Affairs Minister has noted, uncertainty is the new normal. This agreement preserves strategic autonomy, secures market reliability, and positions India pragmatically within an unstable global trade order,” Dr. Kumar explained.

Dr. Siddharth Shukla, however, warns that zero market access could constrain India’s future trade flexibility, increase dependence on the US, and expose vulnerable sectors such as agriculture to competitive pressure.

“In light of the increased trade deficit with the USA, the Buy America clause will flood the Indian markets with local American goods, and within this point, the most vulnerable sector would be the Agricultural sector. Since the USA has an ongoing trade war with China, Mexico & Canada, its agricultural exports suffer a major setback, and at that point, access to the Indian market shall prove to be a lifeline for its agricultural exports. Accepting the reduction of tariffs on the mentioned terms might prove to be a trespassing of the USA in India’s future trade agreements and its policy for the rural markets, which are threatened to be flooded with American goods,” Dr. Shukla said.

Meanwhile, Akshaya Saroha explained that the structural imbalance in the international institutions makes it convenient for the United States to keep the international law at its disposal.

“Therefore, the absence of any enforcement mechanisms that could hold the unfair trade practices in check creates asymmetrical trade across the globe. India, however, has been instrumental in its diplomacy so far as its national interests are concerned; the clear picture of this deal or precedence will be best explained when the nuances of the details are out,” he further added.

The India-US trade deal reflects a pragmatic choice made under extraordinary global volatility, balancing tariff relief against strategic diplomacy and trade.