US President Donald Trump is “radar-focused” on reciprocity in tariffs, and will push for a Bilateral Trade Agreement with India which includes low tariffs, market access for agriculture and addresses the bilateral deficit, said former Assistant US Trade Representative (AUSTR) Mark Linscott ahead of April 2, when new tariffs are expected to be announced. Speaking to The Hindu, Mr. Linscott, who negotiated with India during the previous Trump administration and is now an advisor to the US India Strategic Partnership Forum (USISPF), said the deal offered by India in 2019-2020 was abandoned because it wasn’t “big” enough, and Mr. Trump will expect a much more ambitious deal this time around.
What should we expect on April 2?
We’ve learned in the first couple of months of this administration, that day to day, it’s very difficult to predict even 24 hours in advance. But for the moment, it appears pretty clear that [US President Trump] is determined to impose reciprocal tariffs on April 2, involving a number of countries, there have been references to 15-20, but certainly all those with which the United States runs a substantial trade deficit. And the trade deficit between the United States and India is not at the top of the list, but it remains significant, and India has been a preoccupation for him, going back to the first Trump administration, so we can anticipate reciprocal tariffs. The big question marks are, how those are calculated, whether any of these top 15 or 20 countries are excluded for some reason, perhaps because there has been a trade deal, reached a tariff deal, and whether there will be exceptions.
After PM Modi’s visit to Washington where they announced plans for a Bilateral Trade Agreement, a team of US negotiators have been in Delhi last week. My understanding is that they are exploring whether they can strike a deal on tariffs. And the expectation seems to be that India will need to reach an agreement to lower its tariffs cumulatively in all sectors involved, to what would be a simple average tariff rate roughly equivalent to the US rate. And the you know, the current Indian simple average tariff, according to WTO, is roughly 17% the US is 3.4% so the focus is on that gap.
President Donald Trump has certainly made it clear he wants the reciprocal tariffs, but he has also flip flopped in statements thus far. How clear is the US administration about the way forward?
The reality is that it’s not always clear. We have messages from members of the administration. We have presidential memorandums and statements from the President. And it’s always very difficult to read the tea leaves and to reconcile all of those things. At times they appear contradictory. But the President has been focused on reciprocity in tariffs for a very long time. We all remember during the first Trump administration, his focus specifically on India, his commentary on India being a tariff king, his obsession at that time with motorcycles. I mean, that was an issue I had to negotiate. It seems as if his views on reciprocity have been reinforced. He is radar focused on reciprocity, there seems to be a plan, and he keeps coming back to it. And I do sense that the administration, his Cabinet members are generally in sync on the expectation that there will be tariffs imposed or certainly announced on April 2.
How close were the two sides to a trade agreement in the first administration, when you were negotiating it?
That was never an FTA negotiation, it was being referred to as a mini trade deal, and I was the first negotiator for that. I then left USTR, my successor, Chris Wilson, took over, and despite the characterization of it as a mini trade deal, it was quite substantial. At the time, we had calculated that it would cover roughly ten billion in bilateral trade, and we worked on tariffs as well as non-tariff barriers.
The two sides had never sat at the table together and tried to hammer out a bilateral agreement of this kind, and that was exciting. As you know, [negotiations for the mini-trade deal] did collapse. President Trump, at the time, felt like it just wasn’t big enough, despite the fact that it was going to cover 10 billion in trade, and ultimately it did collapse. GSP, that India had benefitted from under the generalised system of preference programme was suspended. But it was very important experience gained for both sides. It got the two sides accustomed to working on hard issues, not engaging in a lot of theatrics, being serious in the negotiation, getting creative on potential solutions, to bridge gaps. And that’s carrying over well into the dynamic now. There’s a very strong rapport between the two sides in these negotiations.
How much is the collapse of those previous negotiations a factor in the deadline for a BTA by the Fall this year? There is word in Delhi, that having a BTA in place is even a ‘pre-condition’ for Mr. Trump’s travel to India for the Quad summit…
I think there is a bit of a hangover from the first effort- with the President himself, but with his team, certainly Robert Lighthizer, who I had worked for the USTR at the time, and in fact, Jameson Greer, who’s the current USTR, was very much part of that. There was a feeling that it was unfortunate that we were not able to reach an agreement. This relationship is just so important. It certainly is important on the strategic and defence side and the economic and trade side really needs to be ramped up to meet that same level.
I fully expect that that the comprehensive negotiations will spill over into 2026 perhaps even into 2027 but we will have phases, with the first tranche by fall. Discussions on non-tariff barriers, areas like trade facilitation, good regulatory practices, technical barriers to trade, digital trade will all be key.
Will removing the Equalisation Levy on Digital transactions be necessary?
It appears that the 6% [levy] may be eliminated, based on the recent reports I’ve seen, and that certainly would be an important, good faith gesture. Despite the rhetoric, including at the WTO with respect to e-commerce, I’m confident they can hammer out a digital chapter in this larger BTA and that certainly will need some give from India.
How would you address the scepticism in India, that even if a BTA is finalised, it may not mean much. After all, the US has full-fledged FTA’s with countries like Australia, Canada and Mexico, and yet they have been hit by new tariffs…
It’s a fair question. The one constant we have now is that there’s inconsistency.
I do think that if there were a situation in which deals are struck by this administration and later up-ended without there being a strong justification, that will discredit and diminish the leverage that the Trump administration has on trade. The sanctity of trade agreements is very important.
Another concern is that even if India and US get past the tariffs issue, balancing the bilateral deficit, (about $45 billion in India’s favour) will pose a problem. Could that be a deal breaker?
A comprehensive BTA in which India is substantially lowering its tariffs for the United States, not for other trading partners necessarily, would go a long way in diminishing the level of the trade deficit that the United States have. The trade deficit is important but it’s secondary to reaching a comprehensive agreement with across-the-board lowering of tariffs.
US Commerce Secretary Howard Lutnik says he raised the issue market access for US farmers with PM Modi, and Corn in particular. What are the specific areas of agricultural market access that the US wants?
I strongly believe that agriculture is critical to the success of a bilateral trade agreement. It certainly cannot be excluded. Success in that area will go a long way in concluding an agreement. There are areas where there are mutual beneficial interests, for example, feed grains [for livestock], where US would probably gain the most if there were some opening up of the Indian import market. This is a two way street. It shouldn’t be viewed only as US demands being met, and that there are no wins for India in agriculture or otherwise. This has to be a win, win agreement. There are sensitivities on both sides, but there’s a decent track record, and I’m optimistic.