India Should Halt US Trade Negotiations And Treat Them Like Other Countries: GTRI

India should halt all negotiations with the US and adopt a strategy similar to that of countries like China and Canada in engaging with the Trump administration, the Global Trade Research Initiative (GTRI) stated on Saturday. GTRI Founder, Ajay Srivastava, highlighted that the US is applying significant pressure on India to accept trade demands that predominantly benefit American interests. He also pointed out that US President Donald Trump and his officials have criticised India, often relying on inaccurate data.

Wrong Data

"Trump is insulting India publicly using wrong data. No balanced outcome is possible in such circumstances. India should withdraw from all negotiations and prepare to deal with them like other countries are doing," Srivastava said.

In response to US tariffs, China and Canada have announced retaliatory measures. On Friday, Trump stated that India had agreed to lower tariffs on American imports after his administration "exposed" what he described as unfair trade practices.

"This is patently incorrect and intended to pressurise India. India's silence is baffling and India needs to counter with facts. The whole world is watching as Trump and his officials belittle India every day," he added.

US Commerce Secretary Howard Lutnick has stated that India must open its agriculture market, stressing that it cannot be excluded from negotiations with its largest trading partner. He has advocated for a broad, comprehensive trade agreement with India, rather than a "product-by-product" approach to boost bilateral trade.

According to a GTRI report, such a comprehensive trade deal would likely pave the way for US demands, not only for tariff reductions but also on issues like government procurement, agricultural subsidies, patent laws, and unrestricted data flows—areas where India has consistently resisted US pressure.

"Second, Trump's history of disregarding negotiated trade agreements is evident from his decision to scrap the US-Mexico-Canada FTA, which he himself finalised in 2019, and his imposition of 25 per cent tariffs on Canadian and Mexican imports now," it said.

The report recommended that India explore a macro-level reciprocal tariff arrangement covering more than 90 per cent of industrial goods through a "Zero-for-Zero" approach, where India would eliminate tariffs only if the US does the same.

However, it emphasised that agriculture, passenger cars, and other sensitive sectors should remain excluded. It also cautioned India against repeating past mistakes, particularly noting that the auto sector contributes one-third of the country’s manufacturing GDP.

The report highlighted the collapse of Australia's domestic car industry after the country reduced car import tariffs from 45 per cent to 5 per cent in the late 1980s as an example. It pointed out that India’s car exports to the US amount to less than USD 13 million, and if the US raises tariffs on Indian cars, it will have minimal impact on India.

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India's Agricultural Sector

Regarding the opening of India's agricultural sector, Srivastava, who has previously worked in the commerce department, strongly opposed the move, stating that India’s agriculture sector supports over 700 million people, compared to fewer than 7 million in the US. 

He noted that this issue is about livelihoods, not just trade. "Opening even a few agricultural products to US imports could set a dangerous precedent, leading to increased pressure for further concessions," he said. He also pointed out that tariffs on key US agricultural exports to India are already quite low. For example, the tariff on almonds is just Rs 35 per kg, equivalent to around 5 per cent at the current import price of Rs 700/kg. Pistachios face a 10 per cent tariff, and ethyl alcohol only a 5 per cent tariff.

With India’s total agriculture, dairy, and marine exports to the US amounting to only USD 5 billion, Srivastava argued that any retaliatory tariffs from the US would not significantly hurt India. He cautioned that if India concedes now, more products will likely be added to the US demand list in the future.

High Tariff On Certain Items

On the US's criticism of India as a "tariff king," Srivastava acknowledged that India has high tariffs on certain items, such as 150 per cent on wines and alcohol and 100 per cent on cars. However, he noted that the US itself imposes a 350 per cent tariff on tobacco. When comparing overall trade, he stated that the weighted tariff rates for US goods entering India are only 4.9 per cent higher than the tariffs the US applies to Indian products.

He also pointed out that US officials often misrepresent trade figures. For example, President Trump claimed the US trade deficit with India was USD 100 billion, while India's official data placed it at under USD 45 billion. Similarly, the White House fact sheet incorrectly stated that India imposed a 100 per cent tariff on Harley-Davidson motorcycles when the actual tariff was reduced from 50 per cent to 30 per cent on February 1. Srivastava expressed frustration that, despite repeated misinformation from the US, neither the Indian government nor any industry associations have addressed these inaccuracies.

Srivastava concluded that at a time when many countries are pushing back against Trump's trade policies, India must also stand firm, focusing on long-term economic resilience rather than short-term concessions. If the US rejects the "Zero-for-Zero" offer and imposes reciprocal tariffs, he said India should respond only if necessary, as trade data suggests that accurately calculated reciprocal tariffs will not significantly harm most sectors.