USA promises India comparative tariff advantage in proposed trade deal

The United States has assured India that it will enjoy a comparative tariff advantage over peer economies under the proposed bilateral trade agreement, according to a senior Indian government official cited by ANI. External Affairs Minister S. Jaishankar told the HT Leadership Summit that negotiations are approaching the finishing line, with the bulk of issues — including tariff lines — already sorted out.

The assurance matters because of what it implies about the shape of American trade policy. Rather than a single wall of tariffs around the US market, Washington is building a preferential ladder: countries that position themselves outside China's camp get better rates than those that do not. A comparative advantage is only worth anything relative to someone else's disadvantage, which makes the tariff schedule itself an instrument of bloc politics.

India and the US finalised a framework for the first phase of the trade agreement in February, following a phone call between Prime Minister Narendra Modi and President Donald Trump. Negotiations resumed after changes in the American tariff landscape, and Jaishankar noted that many of the remaining issues are 'not so much at our end' — more has changed on the US side. Nisha Biswal, former Assistant Secretary of State for South and Central Asia, told PTI both sides want to conclude phase one by the G20 Summit in Florida. US Secretary of State Marco Rubio said in Mumbai last month that a deal was very close.

The Indian official's caution is telling: 'We will have to see how the tariff framework unfolds.' An advantage granted by decree can be withdrawn the same way — the same administration that promises India better rates than its competitors has already rewritten those rates several times this year, which is precisely why the negotiations keep restarting. Jaishankar's remarks come a month before Modi's expected visit to the US for the G20 Summit.

Washington's tariffs have so far redirected trade rather than shrunk it; China's surplus passed a trillion dollars for a second straight year while the EU's deficit with Beijing runs at over a billion a day. Now the same lever is being used to reward alignment. The official will discover what the advantage is worth when Washington stops needing Indian goodwill.