India-US Tariff Talks Heat Up Amid Trump’s Duty Shock; Almonds, Auto Parts, Pharma in Focus

In the wake of President Donald Trump’s sweeping reciprocal tariff policy, the Indian government has entered urgent negotiations with the United States to finalize a mutual list of goods eligible for tariff reductions. With the Trump administration imposing a 26 percent tariff on Indian imports under a new executive order, India is strategizing to mitigate the impact through a series of concessions on agricultural imports from the U.S., while seeking reduced duties on critical Indian exports such as automobile parts and essential medicines.

Trade Categories Under Discussion: Almonds, Pistachios, Auto Components, Pharmaceuticals

According to senior industry sources, Indian and U.S. trade teams have reopened talks aimed at achieving a partial bilateral trade accord. One major bargaining chip India has placed on the table is its current tariff regime on farm imports, particularly American almonds and pistachios, where existing import duties are Rs 35 per kilogram and 10 percent, respectively. New Delhi is considering a modest reduction in these levies to gain traction in negotiations.

In exchange, India is pressing the U.S. to ease duties on:

• Automobile parts, which face a steep new 25 percent tariff effective from May 3

• Essential medicines and generic drugs, where India is a key global supplier

• Other manufactured exports vital to India’s trade balance with the U.S.

Highlights:

• India is evaluating tariff cuts on U.S. almonds and pistachios to bargain for U.S. concessions

• High-priority Indian exports under negotiation include auto parts and essential medicines

• A 25% U.S. levy on auto parts is set to take effect in May, heightening urgency for India

Behind the Scenes: Diplomatic Push, Section 4C Exemptions, and the Bilateral Trade Agreement

The bilateral discussions follow the latest trade meetings in New Delhi from March 24–29, where U.S. Assistant Trade Representative Brendan Lynch met with Indian officials. The focus was on shielding India from the harshest effects of Trump’s executive order under Section 4C, which allows for tariff exemptions for partners showing goodwill and alignment on trade and national security issues.

Commerce Minister Piyush Goyal, who visited Washington in early March with a delegation, presented a comprehensive list of trade categories for possible negotiation. Sources say this list is currently forming the basis of the ongoing negotiations under the first phase of a Bilateral Trade Agreement (BTA), expected to be finalized by autumn 2025.

Section 4C of the executive order states:

“Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.”

Highlights:

• Section 4C allows President Trump to lower tariffs if trade terms become more reciprocal

• India is leveraging its strategic and economic alignment with the U.S. for exemptions

• A formal Bilateral Trade Agreement could lock in long-term relief from punitive tariffs

Global Context: Strategic Stakes for India in U.S. Trade Relations

The urgency for India stems from its deep trade ties with the United States. In 2024, India ranked tenth among U.S. trading partners, exporting goods worth $91 billion, with the U.S. being India’s largest export destination and fourth-largest import source. This intricate trade relationship makes any friction with Washington particularly consequential for India’s economic outlook.

The reciprocal tariff imposition is already being viewed as a major disruption for Indian pharmaceutical exports, especially if President Trump follows through on his warning of separate levies on imported drugs. Although the pharma sector was exempted in the initial round of tariffs, it remains at risk as Washington reevaluates sector-specific dependencies.

Highlights:

• India exported $91 billion worth of goods to the U.S. in 2024

• The U.S. is India’s #1 export destination and #4 source of imports

• Pharmaceuticals could face a separate tariff regime in upcoming announcements

Expanding Negotiation Scope, Managing Domestic Political Pressures

Sources familiar with the matter indicated that the scope of items under negotiation is expected to expand in the coming weeks, as India prepares for deeper concessions to avoid economic disruption. Domestic stakeholders, particularly in the automobile, pharma, and metals sectors, are urging the government to secure relief swiftly to stem financial losses stemming from Trump’s tariff shock.

Though a full exemption from Trump’s 26% reciprocal duty is currently off the table, officials remain optimistic that India’s willingness to cooperate could lead to partial waivers or sectoral reliefs.

Highlights:

• Negotiations may include more trade categories as pressure mounts

• Domestic industries are urging quick resolution to avoid deeper losses

• Exemptions likely to be conditional on India’s tariff flexibility and strategic alignment