US Extends Suspension of Reciprocal Tariffs to August 1, Offering Relief to Indian Exporters
Finalizing a BTA by July’s end could give India a comparative advantage over competitors.
The United States has extended the suspension of its April 2 reciprocal tariffs until August 1, 2025, providing a reprieve for Indian exporters and additional time to finalize an interim bilateral trade agreement (BTA), according to a White House executive order. The decision excludes India from a list of countries—including Bangladesh, Indonesia, Japan, South Korea, Malaysia, Thailand, South Africa, Bosnia and Herzegovina, Cambodia, Kazakhstan, Laos, Serbia, and Tunisia—that received tariff letters on Monday, detailing duties effective August 1. The suspension, originally set to expire on July 9, follows President Donald Trump’s Executive Order 14266, which imposed a 26% tariff on Indian goods but paused implementation for 90 days to facilitate trade talks.
Exporter Reactions and Strategic Advantage: Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), hailed the extension as a sign of US willingness to engage constructively, offering a “crucial window” to address contentious issues. He noted that finalizing a BTA by July’s end could give India a comparative advantage over competitors like Vietnam (46% tariff) and Thailand (36%), potentially redirecting US demand to Indian exports like textiles and electronics. International trade expert Biswajit Dhar credited India’s firm negotiating stance, while exporters urged diversification into markets like the EU and ASEAN, with Sharad Kumar Saraf warning of Trump’s unpredictability.
Trade Negotiations and Sectoral Focus: India and the US are racing to conclude the first phase of a BTA by September-October 2025, aiming to double bilateral trade to $500 billion by 2030 from $131.84 billion in 2024-25 (exports: $86.51 billion, imports: $45.33 billion). India seeks tariff relief for labor-intensive sectors like textiles, gems, jewelry, leather, and shrimp, while resisting US demands for access to agriculture and dairy, especially genetically modified crops, a sticking point highlighted in X posts by @REDBOXINDIA and @JaipurDialogues. Commerce Minister Piyush Goyal has assured exporters of a balanced approach, with negotiations led by Special Secretary Rajesh Agrawal in Washington.
Economic Context and Risks: The US, India’s largest trading partner since 2021-22, saw a 21.78% rise in Indian exports ($17.25 billion) in April-May 2025. However, without a deal, the 26% tariffs could affect 87% of India’s $66 billion exports to the US, per Citi Research, with pharmaceuticals and automotive sectors most vulnerable. The suspension excludes China (125% tariffs), enhancing India’s competitive edge, but GTRI’s Ajay Srivastava cautions against over-concessions in a comprehensive FTA. India’s proactive diplomacy, including Modi’s February 2025 White House visit, aims to secure a mutually beneficial deal while protecting sensitive sectors.
