India’s government is prepared to slash the country’s tariffs on American goods in order to make a new trade deal with the US.
Reuters reports that India is planning to reduce its tariffs by as much as two-thirds, in the hope of securing relief from President Trump’s “reciprocal tariffs,” which were introduced at the beginning of April, then put on hold to allow foreign nations to negotiate more favourable terms for the US.
Under the plans being considered, India would slash its tariff differential between Indian and US exports from 13% on average to just 4%.
India will do this by reducing tariffs on most American imports to zero and giving preferential access to certain imports from the US. Aircraft, cars, telecommunications and medical equipment, wines and animal feed would be among the goods to received significant or total relief from tariffs.
The US is currently India’s largest trading partner, but Delhi runs a $45.7 billion trade surplus. President Trump has explicitly stated that he wants to rebalance trade and reduce surpluses with the US’s trading partners.
Last week, President Trump hailed the economic effects of his tariffs and said the effects are “just getting started.”
The President posted on Truth Social: “Gasoline just broke $1.98 a Gallon, lowest in years, groceries (and eggs!) down, energy down, mortgage rates down, employment strong, and much more good news, as Billions of Dollars pour in from Tariffs. Just like I said, and we’re only in a TRANSITION STAGE, just getting started!!! Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!”
A week earlier, President Trump said income tax could be abolished for those earning under $200,000, as a result of the income earned from his “reciprocal” tariffs.
“When Tariffs cut in, many people’s Income Taxes will be substantially reduced, maybe even completely eliminated,” Trump posted.
“Focus will be on people making less than $200,000 a year. Also, massive numbers of jobs are already being created, with new plants and factories currently being built or planned. It will be a BONANZA FOR AMERICA!!! THE EXTERNAL REVENUE SERVICE IS HAPPENING!!!”
President Trump made no secret of his ambition to abolish federal income taxes during his election campaign.
In other tariff-related news, China has indicated its willingness to come to the table and negotiate new trade terms. After initially taking a hard line and imposing retaliatory tariffs on US goods, as well as squeezing the supply of vital rare-earth minerals and magnets, China has taken a more conciliatory stance towards the US.