India Fast-Tracks Trade Deals with US and EU Amid Trump Tariff Threat

India adopts Australia-style phased pacts to avoid steep reciprocal duties from July

As the clock ticks down to July 9 — the date when former US President Donald Trump’s suspended reciprocal tariffs could kick in — India is shifting gears to protect its export interests. New Delhi is now fast-tracking trade negotiations with the United States and the European Union (EU) using a proven strategy it successfully applied in 2022 with Australia.

This “tranche-based” approach involves finalising mini trade deals first, with broader agreements to follow later. The urgency stems from the looming threat of US-imposed country-specific tariffs, including a steep 16% on Indian goods, which could be reintroduced within 45 days.

Why the Australia Model?

Back in 2022, India and Australia signed the India-Australia Economic Cooperation Trade Agreement (ECTA) — a scaled-down version of a comprehensive deal. This early harvest pact brought immediate benefits, like zero duty on 96% of Indian exports to Australia. It served as a quick win after more than a decade of stalled negotiations.

Although overall trade between the two nations dipped slightly since the agreement, both countries are continuing negotiations to finalize a full-fledged Comprehensive Economic Cooperation Agreement (CECA). Importantly, the model allowed India to shield sensitive sectors like dairy — a tactic it wants to replicate with other trading partners.

Avoiding Trump’s Tariff Trap

The return of Trump-era tariffs is a significant motivator for India’s recent push. While the 10% baseline US tariff is already in place, additional country-specific duties (including a sharp 26% on Indian products) could come into force unless exemptions are secured.

To avoid this, India is racing to finalize the first tranche of a Bilateral Trade Agreement (BTA) with the US by July 8. This deal will likely include zero-to-zero tariffs on industrial goods, while leaving more sensitive areas like agriculture and dairy for later discussions. The aim is to safeguard India’s export industries while negotiations for a broader agreement continue.

These discussions are part of “Mission 500”, an ambitious plan to double India-US bilateral trade to $500 billion by 2030.

Similar Strategy with the European Union

India is applying the same logic to its talks with the European Union. With the EU being India’s largest trading partner, accounting for 12.2% of its trade, both sides had originally planned to wrap up a full Free Trade Agreement (FTA) by end-2025.

However, with tariff pressures mounting, they are now exploring an interim or early harvest agreement. Talks accelerated after the EU President’s India visit in February, and Commerce Secretary Sunil Barthwal later emphasized the importance of “focusing on core trade issues” to clinch an early deal.

The Bigger Picture

By adopting this pragmatic and modular trade strategy, India hopes to protect exporters, maintain momentum in key negotiations, and avoid disruptions from rising protectionism. Interim pacts not only buy time but also signal intent, keeping trade flowing even amid geopolitical and economic uncertainty.

India is not waiting for perfect deals — it’s securing smart ones now.