India, US Face Trade Standoff Over Tariff Threats

India and the United States are locked in tense negotiations as a July 9 deadline approaches, with the US threatening to impose a 26% tariff on Indian goods if no agreement is reached. India has formally notified the WTO of plans for retaliatory tariffs on US products in response to Washington's existing 25% duties on Indian automobiles and auto parts, impacting nearly $2.9 billion in trade. Stalemates remain over auto, steel, and agriculture sectors, with India resisting US demands for broader access to sensitive markets such as agriculture and dairy. Moody’s Ratings suggests India could benefit from relatively lower US tariffs compared to other Asia-Pacific peers, potentially strengthening its manufacturing sector following a UK free trade deal and ongoing EU talks. However, Moody’s also warns that US reshoring efforts may constrain India’s gains. The talks’ outcome is critical, as failure could trigger a broader trade war, and India has signaled readiness to diversify its trade relationships and respond firmly if necessary.