President Donald Trump announced on Thursday that India has proposed eliminating tariffs on American imports as part of ongoing bilateral trade negotiations. During a business roundtable in Doha, Qatar, Trump stated, "India is offering us a deal where basically they are willing to literally charge us no tariffs," according to Reuters. The statement comes as India seeks to finalize a trade agreement with the United States before the expiration of Trump's 90-day pause on higher tariff implementation.

This potential trade breakthrough follows months of negotiations after Trump imposed a baseline 10% tariff on global imports in April, with a threat of higher 26% "reciprocal tariffs" on Indian goods. India's move would represent a dramatic shift for a country with some of the world's highest import duties, which Trump has previously labeled a "tariff abuser."

Bilateral Trade Context

The United States and India have been working to strengthen their trade relationship amid growing economic tensions globally. Bilateral trade between the nations reached approximately $129 billion in 2024, with India maintaining a substantial $45.7 billion trade surplus, as reported by CNBC. This imbalance has been a point of contention for the Trump administration, which has sought more reciprocal trading terms with partners worldwide.

Previous negotiations had already shown progress, with India reportedly offering to slash its tariff gap with the U.S. to less than 4% from nearly 13%. According to the Vivekananda International Foundation, both leaders committed in February 2025 to enhancing bilateral trade to $500 billion by 2030, signaling strong intentions for deeper economic ties despite tariff disagreements.

Indian Trade Minister Piyush Goyal is scheduled to lead a delegation to the United States starting May 16 to advance these negotiations, demonstrating the urgency with which India is approaching the trade talks.

Implications For Global Trade

Trump's tariff strategy has caused significant disruption to global markets, with the World Trade Organization warning that the outlook for international commerce has "deteriorated sharply" due to trade policy uncertainty. The organization now projects that world merchandise trade will decline by 0.2% in 2025 based on currently implemented tariffs, according to McKinsey & Company.

India's offer comes amid intense competition among nations to secure favorable trade terms with the United States. Vietnam has reportedly offered to eliminate tariffs on U.S. agriculture and energy imports, while the United Kingdom recently finalized a framework agreement that maintains the 10% base tariff but provides other concessions.

A successful U.S.-India trade deal could significantly reshape global supply chains, especially as companies seek alternatives to China-based manufacturing in response to the 125% tariffs Trump imposed on Chinese goods. This potential realignment creates both opportunities and challenges for multinational corporations and emerging market economies.

Economic Impact Assessment

The proposed zero-tariff arrangement would have multifaceted effects on both economies. For India, eliminating tariffs would potentially grant greater access to the American market for key export sectors like pharmaceuticals, textiles, and information technology services. The U.S. economy would benefit from reduced prices on imported goods and potentially increased exports to the Indian market.

However, economic analysts have expressed concerns about the broader implications of tariff policies. A report from the Tax Foundation estimates that Trump's tariffs amount to an average tax increase of nearly $1,200 per U.S. household in 2025, with potential reductions in GDP growth by 0.7% before foreign retaliation is considered.

For India, the Reserve Bank recently reduced its growth forecast for the 2025-26 fiscal year to 6.5% from 6.7%, partly reflecting concerns about trade uncertainties. Despite these adjustments, Indian finance ministry officials remain confident that the country will achieve its projected growth range of 6.3-6.8% regardless of tariff disruptions.

J.P. Morgan Research has noted that tariffs and trade policy uncertainty could have a negative impact on U.S. and global GDP through 2026, highlighting the far-reaching consequences of current trade tensions.

Indian Market Response

The Indian business community has reacted cautiously to the prospect of zero tariffs. While eliminating duties would boost competitiveness for American imports, it could also create challenges for domestic manufacturers accustomed to tariff protection. Pharmaceutical companies have shown optimism, with Indian drugmaker shares rising after the sector received exemptions from U.S. tariffs.

India's equity benchmarks reportedly jumped to a seven-month high following Trump's comments about the potential trade deal, indicating positive market sentiment about the economic prospects of closer U.S.-India trade relations.

The Federation of Indian Export Organisations, representing more than 37,000 exporters, has stated that the 90-day tariff pause gives Indian negotiators a crucial window to conclude a bilateral trade agreement. Industry leaders have suggested that with China facing punitive tariffs, India could position itself as a reliable alternative supplier to the U.S. market.

Related Reading on Morrow Report

For a deeper understanding of alternative economic systems in an era of changing trade relationships, readers can explore additional analysis at Morrow Report. This resource examines how nations are adapting to evolving trade dynamics and developing new economic frameworks to navigate increasing protectionism and tariff barriers. The analysis provides valuable context for understanding how the potential U.S.-India zero tariff agreement fits into broader trends of economic realignment.