Exporters on Edge as US Defers India Visit, Additional 25% Tariff to Kick in from 27th August

Moneylife Digital Team 18 August 2025

Consumer Interest

A planned visit by US trade negotiators to New Delhi later this month has been called off, casting fresh uncertainty over the future of the proposed India-US bilateral trade agreement (BTA) and heightening anxiety over a looming tariff hike on Indian exports.

According to a Reuters report, the delegation led by assistant US trade representative Brendan Lynch was due in the capital between 25th August to 29 August 2025 for the sixth round of talks. The visit has now been deferred indefinitely, with sources citing unresolved differences over India’s continued purchases of Russian oil and its reluctance to open its farm and dairy markets to American companies.

The US embassy in New Delhi confirmed it had no further information on the matter, adding that the discussions were being handled directly by the office of the US trade representative (USTR).

The suspension of talks comes days before an additional 25% tariff on Indian goods is scheduled to take effect on 27 August 2025 under an executive order by president Donald Trump. The new duty will effectively double total US tariffs on some Indian exports to 50%, among the steepest levied on any trading partner.

The Trump administration had earlier imposed a 25% tariff on Indian imports from 7 August 2025, citing New Delhi’s defiance over oil and defence purchases from Russia. The latest penalty, announced earlier this month, was framed as further punishment for India’s continued energy trade with Moscow amid the Ukraine conflict.

Trade negotiations between New Delhi and Washington had made modest progress over five rounds but collapsed on core issues, particularly India’s agriculture and dairy sector protections, and its refusal to scale down Russian oil imports.

Sources told CNBC-TV18 that while diplomatic engagement at the recent Alaska summit raised hopes of a compromise, the absence of a peace deal involving the US, Russia and Ukraine meant Washington had no incentive to soften its position on tariffs.

India’s ministry of external affairs (MEA) has consistently argued that the country is being 'unfairly singled out' for continuing Russian oil imports while US and European Union (EU) themselves maintain trade in other Russian goods.

A senior Indian official told PTI on Saturday that the cancelled visit would 'likely be rescheduled,' but did not indicate a timeline.

The delay has rattled India’s export community. Key sectors including textiles, pharmaceuticals, and engineered goods fear severe disruption if the 50% tariff regime is implemented. Between April and July, India’s exports to the US had already grown 21.6% to US$33.5bn (billion), commerce ministry data showed, underscoring the importance of the American market.

Industry experts warn that if the new tariffs are enforced, Indian exporters will face sharp erosion of competitiveness, while US consumers could also see higher prices on certain imported goods.

Despite the setback, both governments are understood to be pursuing backchannel talks to explore whether the new duties can be suspended or diluted. Washington has also hinted at deferring certain secondary sanctions, though there is no sign yet of a climbdown on tariffs.

With less than 10 days before the higher duties take effect, the fate of the sixth round of talks—and the broader BTA itself—remains uncertain.

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