India, US start trade talks, Pg3

Key Highlights:

• India and the US have commenced trade talks, with US Trade Representative (USTR) Jamieson Greer leading the US delegation and Union Commerce and Industry Minister Piyush Goyal representing India.
• The negotiations aim to finalize a trade deal before new, steeper US tariffs under Section 301 of the US Trade Act of 1974 are expected to be introduced after July 24.
• The US had previously imposed reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA), which were subsequently struck down by the US Supreme Court.
• India's export surplus with the US significantly declined by over 40% from May 2025 to May 2026, influenced by existing US tariffs.
• US Ambassador to India Sergio Gor indicated that only "1%" of the bilateral trade deal remains to be concluded.

Detailed Insights:

• The US employs a "carrot-and-stick" approach in trade negotiations, using market access as an incentive and tariffs as a deterrent.
• Following the Supreme Court's decision on IEEPA tariffs, the US administration sought alternative legislation, such as Section 122, for imposing temporary tariffs.
• India is seeking competitive tariff rates within Washington’s new Section 301 architecture and assurances against further investigations.
• India is concerned about a potential influx of US agricultural products, which benefit from higher government support, posing a threat to domestic farmers.
• The US aims to protect and revive its industrial base, while India fears that increased high-value tech imports could erode its goods trade surplus.
• India maintains an overall annual goods trade deficit exceeding $300 billion, with the US being the only major economy where it holds an export surplus.
• Gross Foreign Direct Investment (FDI) inflows into India reached a record $94.53 billion in 2025-26, though net figures were considerably lower at $7.65 billion.
• Foreign Portfolio Investors (FPI) recorded net inflows in February but experienced significant outflows in March and April due to the West Asia conflict.

Key Concepts Involved:

• International Emergency Economic Powers Act (IEEPA): A US federal law granting the President authority to regulate international commerce during a declared national emergency.
• Section 122: A provision in US trade law that allows the President to impose temporary tariffs for a specific duration.
• Section 301 of the US Trade Act of 1974: A US trade law empowering the President to take action, including tariffs, against countries engaging in unfair trade practices.
• Trade Surplus: An economic condition where a country's value of exports exceeds its value of imports, resulting in a positive balance of trade.