As India awaits an announcement on an interim trade deal with the US, Commerce Secretary Howard Lutnick on Sunday said that August 1 is a hard deadline for countries to begin paying tariffs, although the US will continue to engage with them afterwards.
This comes after India and the US concluded a week-long round of trade negotiations aimed at finalising an interim trade deal, seen as crucial for India to avoid reciprocal tariffs and gain an edge over its Asian peers.
“That’s a hard deadline, so on August 1, the new tariff rates will come in… Nothing stops countries from talking to us after August 1, but they’re going to start paying the tariffs on August 1,” Lutnick said in a television interview on Sunday.
Notably, President Donald Trump’s deadline for reciprocal tariffs has shifted from April 2 to July 9, and now to August 1. While Trump has reiterated that a deal with India is close, India could face tariffs of up to 26 per cent if both countries fail to reach an agreement.
Government officials have maintained that India is aiming to sign a bilateral trade agreement (BTA) by the end of the year, which would provide market access in labour-intensive sectors and ensure a significant tariff differential compared to its Asian peers.
Lutnick further stated that smaller countries — including those in Latin America, the Caribbean, and many in Africa — would face a baseline tariff of 10 per cent. “The bigger economies will either open themselves up or they’ll pay a fair tariff to America,” he said.
Meanwhile, trade experts have pointed out that, despite being presented as trade “agreements,” Trump’s deals do not meet WTO standards for Free Trade Agreements (FTAs). Under WTO rules, FTAs require mutual tariff reductions on a substantial share of trade.
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“Under the Trump model, only the partner country lowers its Most-Favoured-Nation (MFN) tariffs, while the US makes no reciprocal cuts. Trump lacks Fast Track Trade Authority from Congress to reduce MFN tariffs. Instead, he’s offering to roll back only the ‘Liberation Day’ tariffs imposed in April under emergency powers — tariffs that a US federal court has already ruled unlawful. The case is under appeal, but the legal basis remains fragile,” the think tank Global Trade Research Initiative (GTRI) said.
For India, those April tariffs added a 26 per cent surcharge on top of normal US tariffs. Even if a deal is struck, Indian exports may still face a minimum 10 per cent additional levy, making it a pressured compromise, not a true partnership, GTRI said in a report.
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