Trump’s ultimatum: India faces 25% tariffs without deal

The shadow of a looming deadline stretched across the globe, threatening to engulf India in a storm of 25% tariffs. With just two days remaining until August 1st, President Donald Trump’s words echoed with an unmistakable finality: a trade deal, or India would face the brunt of increased levies. The stakes couldn’t be higher, as the clock relentlessly counted down to a potential economic inflection point between two global powers.

“Yeah, I think so,” Trump had told a throng of reporters on Tuesday, his voice resonating with an air of unyielding resolve when pressed on whether Delhi would face the punitive tariffs. The message was unmistakable a deal, or the consequences.

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For months, Indian and American officials had been locked in negotiations, a diplomatic dance of give and take, hope and apprehension. One moment, optimism would surge, signaling an imminent breakthrough. The next, a cautious tone would prevail, pushing the finish line further into the horizon.

When asked about his expectations for a deal with India, Trump’s stance was familiar. “We’re going to see. India has been a good friend, but India has charged basically more tariffs than almost any other country,” he declared, a hint of exasperation in his voice. “But now I’m in charge, and you just can’t do that.”

The BBC had reached out to India’s commerce ministry for their take, but the silence was deafening. Tariffs, those invisible taxes on imported goods, had become Trump’s weapon of choice in his global trade battles. India, in his eyes, was a “tariff king,” a “big abuser” of trade ties, a label he had proudly bestowed.

This wasn’t the first time India had found itself in Trump’s tariff crosshairs. Back in April, a staggering 27% tariff on Indian goods had been announced, only to be mercifully paused. Since then, the race had been on, a frantic scramble to ink an agreement and avert the looming trade war.

“We continue to speak with our Indian counterparts. We’ve always had very constructive discussions with them,” US Trade Representative Jamieson Greer had offered earlier in the week, a diplomatic nod to the ongoing efforts. Yet, he hadn’t shied away from acknowledging India’s long-standing “protectionist” trade policy, a strategy “premised on strongly protecting their domestic market.” Trump, Greer emphasized, was unwavering in his pursuit of deals that would “substantially open other markets to the US.”

The sticking points, as always, remained agriculture and dairy. Washington, with its eyes on India’s vast, untapped farm sector, had long pushed for greater access. But India, fiercely protective of its food security, the livelihoods of millions of small farmers, and its burgeoning domestic market, had stood its ground.

Just last week, Indian Commerce Minister Piyush Goyal had reiterated India’s firm stance to CNBC. The agriculture sector, he stressed, was “sensitive for India,” and the nation would ensure that farmers’ interests were “well protected.” Despite the challenges, Goyal remained “optimistic” about striking a deal soon, telling news agencies that India was making “fantastic progress” in talks with the US, hoping to “conclude a very consequential partnership.”

The stakes were immense. Until recently, the US had reigned as India’s largest trading partner, their bilateral trade soaring to an impressive $190 billion in 2024. Trump and Indian Prime Minister Modi had ambitiously set their sights on more than doubling this figure to $500 billion.

India had already made concessions, reducing tariffs on a range of goods, from Bourbon whiskey to motorcycles. Yet, the US continued to grapple with a $45 billion (£33 billion) trade deficit with India, a figure Trump was determined to shrink. The next two days would determine whether these efforts would bear fruit, or if India would face the full force of America’s tariff might.