The bilateral trade relationship between India and the United States is facing a period of considerable uncertainty, marked by the abrupt postponement of scheduled trade negotiations and the looming threat of increased tariffs. The sixth round of talks, which was supposed to take place in New Delhi from August 25 to August 29, 2025, has been called off.

No official, written communication has been received, but Indian authorities have been informed verbally, and both sides now await a rescheduling of the visit, though no new date has been provided so far.

This development comes at a critical moment as President Donald Trump has set an August 27 deadline, after which tariffs on Indian exports to the US may double, escalating from the current 25% to 50%. This move is formally justified by Washington as a response to India’s continued purchase of oil and arms from Russia, and is compounded by proposed secondary sanctions that further threaten Indian trade.

The tariff increase places Indian exporters at a marked disadvantage compared to other regional competitors, effectively subjecting India to harsher penalties than countries like Vietnam, Indonesia, or Japan where tariffs remain relatively lower.

The trade negotiations themselves have been weighed down by contentious issues, most notably the US demand for sweeping market access in highly protected sectors such as agriculture and dairy. India, on its part, has steadfastly resisted these demands, citing the vital need to safeguard the livelihoods of small and marginal farmers and cattle rearers.

Prime Minister Narendra Modi has publicly reaffirmed that national interests in these sectors will not be compromised, reiterating his support for domestic producers in recent public addresses.

The postponement of talks and ongoing tariff threats have had tangible repercussions: nearly $40 billion of Indian exports could be affected if the announced duties are imposed, posing a significant risk to India, the world’s fifth-largest economy, and its broader ambitions to double bilateral trade with the US to $500 billion by 2030.

The fate of these additional duties now hinges, at least in part, on the outcome of recent diplomatic and geopolitical interactions. Notably, President Trump’s meeting with Russian President Vladimir Putin on the Ukraine conflict in Alaska has opened a marginal window of opportunity for India.

While no immediate breakthrough was secured, Trump’s alignment with Putin on a possible peace deal for Ukraine and his subsequent remarks have temporarily delayed the imposition of secondary tariffs, suggesting a wait-and-see approach for the next two to three weeks, especially regarding major economies like China—another key buyer of Russian crude oil.

Despite the tense atmosphere and imminent deadlines, both Indian and US officials continue to publicly express optimism. Negotiators on both sides insist that talks remain constructive and that the drive for a comprehensive agreement is ongoing, even if the process now appears likely to extend past the original deadlines. India is working to maintain a constructive stance, with officials emphasising long-term alignment and solutions over short-term disruptions. However, the reluctance to offer fresh concessions ahead of deadlines underscores the persistent strategic and economic friction.

The trade relationship between India and the US is trapped in a cycle of uncertainty and hard bargaining. The abrupt postponement of talks, compounded by a potential doubling of tariffs, has placed immense pressure on Indian exporters and government authorities.

As diplomatic negotiations with Russia and the evolving geopolitical landscape intercede, the situation remains highly fluid—with both risks and opportunities present in the weeks ahead. Indian policymakers are bracing for impact while hoping for a positive breakthrough before the threatened secondary tariffs take effect, even as they remain adamant about not sacrificing domestic agricultural and dairy interests for short-term trade gains.

(Report synthesised from multiple news reports by TOI, NDTV, and others dated August 17, 2025)