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India could face higher US tariffs than competing Asian economies if it fails to conclude an interim trade agreement with Washington before July 24, former US trade official Mark Linscott has warned, even as negotiators from both countries race to finalise a deal that is said to be 99% complete.
Speaking to CNBC-TV18, Linscott, a former Assistant US Trade Representative and now Senior Fellow at the Atlantic Council, said the expiry of temporary US duties later this month could leave India exposed to a significantly higher tariff regime if an interim agreement is not reached in time.
“July 24 is the drop-dead date,” Linscott said. “We could have a situation in which, under Section 301 and with no interim agreement, India is facing a much higher tariff rate.”
His comments come as negotiations on an interim India-US trade framework enter their final phase. A delegation led by Assistant US Trade Representative and Chief Negotiator Brendan Lynch is in New Delhi this week to conclude talks. US Ambassador to India Sergio Gor recently said that 99% of the agreement had already been settled, with discussions focused on the remaining issues.
The urgency around the negotiations has increased after the United States proposed fresh duties under Section 301 of the US Trade Act. India is among the countries facing a proposed 12.5% levy under one of the ongoing investigations, which relates to forced labour concerns.
However, Linscott noted that this is only one part of the picture. A second Section 301 investigation examining excess industrial capacity across 16 countries, including India, is yet to be concluded.
“There are still some question marks remaining,” he said. “We still don't have the full picture until we have the results of the investigation on excess capacity.”
According to an Atlantic Council report, the combined impact of the two investigations could potentially generate around $12 billion in additional tariff revenue from India, assuming the second round of levies is imposed at roughly 20%.
Linscott said the real concern for India is not only the absolute tariff rate but also how it compares with those imposed on competing manufacturing hubs.
“What really matters in calculating the pros and cons is what other countries are getting,” he said. “Might India have a higher tariff than countries such as Sri Lanka, Bangladesh, Vietnam, Malaysia or Indonesia? That is the big question.”
He added that if rival economies secure favourable trade arrangements with Washington while India remains outside an agreement, Indian exporters could face a competitive disadvantage.
Despite the uncertainty, Linscott expressed confidence that both sides would reach an understanding before the deadline.
“I’m quite hopeful and optimistic that they will strike this agreement well before that date,” he said.
The former USTR official also suggested that India should not view the proposed Section 301 duties as fixed. According to him, the Office of the US Trade Representative retains considerable flexibility under the law.
“USTR has lots of wiggle room,” Linscott said. “USTR can strike a deal and lower those rates as soon as an agreement is reached.”
India has reportedly sought assurances against future tariff actions as part of the negotiations. While acknowledging New Delhi’s concerns, Linscott said obtaining iron-clad guarantees may be difficult because Section 301 investigations can be launched in the future on different issues.
On agriculture, one of the most sensitive areas in the negotiations, Linscott said both sides appear to have narrowed their differences. He noted that the most contentious issues have likely been deferred to a later bilateral trade agreement, leaving only a handful of technical matters to be resolved in the interim pact.
“This is the last stage of the negotiation for the interim agreement. It’s always the hardest stage of a negotiation,” he said. “Those last few issues need to be resolved, gaps need to be bridged, and negotiators need creativity and compromise to find solutions.”
The talks are taking place against a backdrop of broader strategic engagement between the two countries. During his recent visit to India, US Secretary of State Marco Rubio called for greater energy cooperation and urged India to buy more US oil and gas. He also suggested Venezuela as an additional source of energy supplies.
Also Read | US tariff threat adds pressure on India-US trade talks, Section 301 seen as leverage tool
Recent data from Kpler indicates that India has already increased energy purchases from both countries. The US became India’s largest supplier of LPG in May, while crude oil shipments from the US more than doubled. Venezuela emerged as India’s fourth-largest oil supplier during the month.
Linscott said the strong political commitment shown by leaders in both countries and the broader strategic partnership should help negotiators overcome the final hurdles and conclude the agreement before tariff risks escalate later this month.
Speaking to CNBC-TV18, Linscott, a former Assistant US Trade Representative and now Senior Fellow at the Atlantic Council, said the expiry of temporary US duties later this month could leave India exposed to a significantly higher tariff regime if an interim agreement is not reached in time.
“July 24 is the drop-dead date,” Linscott said. “We could have a situation in which, under Section 301 and with no interim agreement, India is facing a much higher tariff rate.”
His comments come as negotiations on an interim India-US trade framework enter their final phase. A delegation led by Assistant US Trade Representative and Chief Negotiator Brendan Lynch is in New Delhi this week to conclude talks. US Ambassador to India Sergio Gor recently said that 99% of the agreement had already been settled, with discussions focused on the remaining issues.
The urgency around the negotiations has increased after the United States proposed fresh duties under Section 301 of the US Trade Act. India is among the countries facing a proposed 12.5% levy under one of the ongoing investigations, which relates to forced labour concerns.
However, Linscott noted that this is only one part of the picture. A second Section 301 investigation examining excess industrial capacity across 16 countries, including India, is yet to be concluded.
“There are still some question marks remaining,” he said. “We still don't have the full picture until we have the results of the investigation on excess capacity.”
According to an Atlantic Council report, the combined impact of the two investigations could potentially generate around $12 billion in additional tariff revenue from India, assuming the second round of levies is imposed at roughly 20%.
Linscott said the real concern for India is not only the absolute tariff rate but also how it compares with those imposed on competing manufacturing hubs.
“What really matters in calculating the pros and cons is what other countries are getting,” he said. “Might India have a higher tariff than countries such as Sri Lanka, Bangladesh, Vietnam, Malaysia or Indonesia? That is the big question.”
He added that if rival economies secure favourable trade arrangements with Washington while India remains outside an agreement, Indian exporters could face a competitive disadvantage.
Despite the uncertainty, Linscott expressed confidence that both sides would reach an understanding before the deadline.
“I’m quite hopeful and optimistic that they will strike this agreement well before that date,” he said.
The former USTR official also suggested that India should not view the proposed Section 301 duties as fixed. According to him, the Office of the US Trade Representative retains considerable flexibility under the law.
“USTR has lots of wiggle room,” Linscott said. “USTR can strike a deal and lower those rates as soon as an agreement is reached.”
India has reportedly sought assurances against future tariff actions as part of the negotiations. While acknowledging New Delhi’s concerns, Linscott said obtaining iron-clad guarantees may be difficult because Section 301 investigations can be launched in the future on different issues.
On agriculture, one of the most sensitive areas in the negotiations, Linscott said both sides appear to have narrowed their differences. He noted that the most contentious issues have likely been deferred to a later bilateral trade agreement, leaving only a handful of technical matters to be resolved in the interim pact.
“This is the last stage of the negotiation for the interim agreement. It’s always the hardest stage of a negotiation,” he said. “Those last few issues need to be resolved, gaps need to be bridged, and negotiators need creativity and compromise to find solutions.”
The talks are taking place against a backdrop of broader strategic engagement between the two countries. During his recent visit to India, US Secretary of State Marco Rubio called for greater energy cooperation and urged India to buy more US oil and gas. He also suggested Venezuela as an additional source of energy supplies.
Also Read | US tariff threat adds pressure on India-US trade talks, Section 301 seen as leverage tool
Recent data from Kpler indicates that India has already increased energy purchases from both countries. The US became India’s largest supplier of LPG in May, while crude oil shipments from the US more than doubled. Venezuela emerged as India’s fourth-largest oil supplier during the month.
Linscott said the strong political commitment shown by leaders in both countries and the broader strategic partnership should help negotiators overcome the final hurdles and conclude the agreement before tariff risks escalate later this month.
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