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India and the United States have postponed their proposed meeting on the interim trade agreement after a sudden shift in American tariff policy. According to PTI, citing government sources, the meeting scheduled in Washington from February 23 to 26 has been deferred. The development follows changes in US global tariff rates that have altered the basic premise of the negotiations. Under the earlier understanding, India was to face an 18 percent tariff, but the new global rate announced by US President Donald Trump now stands at 15 percent, creating fresh uncertainty over the applicable duty structure.

Supreme Court ruling triggers tariff reset

The confusion began after the US Supreme Court struck down all previously imposed global tariffs on Friday. Within three hours of the ruling, Trump addressed a press conference and announced a fresh 10 percent global tariff. Within 24 hours, he revised it upward to 15 percent.

As a result:

• The earlier 18 percent tariff under the proposed deal now appears higher than the new global rate.
• Both sides have decided to review the revised framework before fixing fresh dates.
• The postponement may delay the formalisation of the interim trade agreement.

Framework had reduced earlier tariff burden

Commerce Minister Piyush Goyal had announced details of the proposed arrangement on February 7. He had stated that Indian agricultural products would be exported to the US at zero tariff, while no tariff concessions would be granted to American farm goods entering India.

India also agreed to purchase goods worth 50,000 crore dollars from the US over five years. Following this, the framework for the interim trade agreement was released. Under the framework:

• US tariff on Indian goods was reduced from 25 percent to 18 percent.
• An additional 25 percent tariff imposed on India over Russian oil purchases was withdrawn.

Uncertainty over final tariff rate

The latest tariff revision has raised a key question: will India now face 18 percent or 15 percent duty? Two parallel statements have deepened the ambiguity.

Trump said at the press conference that the trade deal with India would proceed as planned and would not be affected. However, a BBC report cited a White House official saying that countries including India, the United Kingdom and the European Union, which have trade agreements with the US, would face a 10 percent global tariff under Section 122 instead of previously negotiated rates. Based on the subsequent announcement, the applicable rate would stand at 15 percent.

If the BBC account is accurate, India’s tariff exposure may drop from 18 percent to 15 percent. Trump’s remarks, however, indicate the earlier 18 percent structure may continue.

Broader BTA timeline faces disruption

The interim framework was designed to pave the way for a comprehensive bilateral trade agreement between India and the US. A joint statement had said that the framework would advance negotiations that began on February 13, 2025. The proposed agreement includes provisions on market access, strengthening supply chains and reducing trade barriers.

Goyal had said on February 20 that the agreement was expected to be finalised by the end of February, signed in March and implemented fully from April. With the current postponement, that timeline now appears uncertain. India was also expected to conclude trade understandings with several major economies in the coming months.

Gains for exporters and sector safeguards

The proposed deal offered several benefits to India:

• Tariff reduction on Indian goods to 18 percent, improving access to the US market.
• Zero tariff on generic medicines, gems and jewellery, and aircraft parts.
• Access to a 30 trillion dollar US market for MSMEs, farmers, fishermen, women and young entrepreneurs.
• New opportunities in textiles, leather, footwear, plastics, rubber products, organic chemicals, home decor, handicrafts and select machinery.
• Relief under Section 232 for aircraft parts and tariff rate quotas for certain auto components.

India protected its agriculture and dairy sectors in the framework. Products such as maize, wheat, rice, soyabean, poultry, milk, cheese, ethanol, tobacco, selected vegetables and meat were kept outside tariff concessions. The government said the decision was aimed at safeguarding farmers’ incomes, food security and the rural economy.

At the same time, India agreed to reduce or eliminate import duties on certain American items including dried distillers grains, red sorghum for animal feed, dry fruits, fresh and processed fruits, soybean oil, wine and spirits.