US-India Trade Deal 'Close' as 18% Tariff Framework Hangs in Balance

Washington and New Delhi are "as close as you can be without having executed the agreement" on a trade deal, US Secretary of State Marco Rubio told reporters in Mumbai on Tuesday. For apparel and textile exporters, the stakes are a tariff rate that already fell from a threatened 50 percent to 18 percent under a February framework — and could lock in further advantage over Vietnam, China and Bangladesh if finalized.

"I think there's a small number of items left to wrap up, so I think that will happen shortly," Rubio said, speaking ahead of talks with Subrahmanyam Jaishankar, India's external affairs minister.

What is still blocking the deal?

Two issues have slowed negotiations for months. India has resisted opening politically sensitive agricultural sectors — poultry, dairy, rice and wheat — to US competition. New Delhi also continues buying discounted Russian oil, which exposed it to threatened tariffs of up to 100 percent until President Donald Trump waived the impending sanctions on Friday.

The backdrop matters for sourcing teams. The Trump administration imposed tariffs of up to 50 percent on most Indian goods in August 2025, including a penalty tied to Russian oil purchases. The February framework cut that rate to 18 percent. New Delhi is now pressing for terms that give its exporters a competitive edge over regional rivals such as Vietnam, China and Bangladesh.

Why the tariff threat is legally shaky

Rubio's optimism comes with a caveat that trade lawyers have flagged repeatedly: the legal foundation of the deal itself is contested.

Experts say uncertainty over Trump's tariff authority delayed a final agreement after lawsuits culminated in a Supreme Court ruling in February that undermined the reciprocal duties (tariffs imposed in retaliation for other countries' trade barriers) forming the basis of the deal.

"The February framework had offered to reduce India's reciprocal tariff… in return for substantial Indian concessions," Ajay Srivastava, founder of the Global Trade Research Initiative, said in a note earlier this month. "Once that tariff regime was struck down, the value of the U.S. offer became unclear."

That scrutiny intensified on Tuesday, when a food importer sued to block new tariffs on Canadian imports, arguing they represent another instance of presidential overreach already rejected by the courts. Trump levied 50 percent tariffs on $20 billion worth of Canadian goods over the summer.

What about energy and Reliance?

Rubio, on a six-day tour of Uzbekistan and India, addressed the oil question directly. Before departing Saturday, he said India had diversified its energy sources but still buys substantial Russian volumes because "it's hard to pivot from one day to the next." He called New Delhi an "important ally and partner."

On Tuesday, Rubio said he would encourage Reliance Industries to refine more Venezuelan crude and explore producing oil in the South American nation.

"They have done so in the past, and I think as more and more of Venezuelan oil comes online, that is something they can do," Rubio told reporters. "We are going to go see what the holdup is and what opportunities exist."

What sourcing teams should watch

For supply-chain professionals, the near-term questions are concrete:

• Whether the 18 percent rate holds if the deal is executed, or whether the struck-down reciprocal tariff mechanism forces renegotiation of the terms.
• Whether India secures terms that undercut Vietnam, China and Bangladesh on finished goods — a shift that would alter country-of-origin calculations for US-bound orders.
• Whether agricultural concessions, the stated sticking point, drag talks past "shortly" into another quarter.

Rubio offered no date for signature and no detail on the remaining items. His "small number of items" framing is a diplomatic signal, not a signed document. Until the deal is executed, the 18 percent framework remains an announced intention rather than a confirmed outcome — and buyers pricing Indian production should treat it accordingly.