In a flurry of trade activity, the Trump administration has recently announced new trade deals with Japan and the Philippines, following closely on the heels of an agreement with Indonesia. These deals, however, have not yet been signed, remaining as verbal commitments without binding documents. While these agreements offer some relief from potentially higher tariffs, India has so far resisted similar pressures, holding out on concessions.

Trump's Trade Deals with Japan and the Philippines

Under the newly announced agreement with Japan, the U.S. will impose a 15% tariff on Japanese exports. In return, Japan will invest $550 billion in the U.S., with the U.S. expected to receive 90% of the profits. Japan will also open its markets to U.S. exports of cars, rice, and certain other agricultural products. The deal does not cover steel and aluminum exports, which remain subject to a 50% tariff. Japanese Prime Minister Shigeru Ishiba hailed the deal as a "triumph," while President Trump described it as potentially the largest deal ever made.

The trade deal with the Philippines will see the U.S. levy a 19% tariff on goods imported from the Philippines. In return, the Philippines will eliminate all tariffs on imported U.S. goods. President Trump characterized this as the Philippines "going OPEN MARKET with the United States, and ZERO Tariffs". The Philippines is also expected to increase purchases of U.S. soybeans, wheat, and pharmaceuticals.

These deals come just ahead of an August 1st deadline set by the Trump administration for trade partners to reach agreements to avoid higher tariffs. Trump's negotiating strategy involves threatening tariffs to push countries to make concessions. The deals with Japan, the Philippines and Indonesia all follow this pattern.

India's Position

While other nations are making concessions, India has resisted similar demands from the U.S. in ongoing trade talks. Disagreements persist, particularly over sensitive sectors like agriculture and dairy. Indian consumers have raised objections to American cattle feeding methods that include animal by-products, practices conflicting with Indian dietary principles.

It is expected that any trade deal between the U.S. and India would involve tariffs above 10%. As Trump presses for what some describe as one-sided deals, New Delhi faces a tough choice.

Broader Implications

These trade deals signal a potential shift towards higher baseline tariffs in international trade. The agreements with Vietnam, Indonesia, the Philippines, and Japan all involve tariffs in the 15-20% range. This could represent a "new normal" where countries must contend with these higher rates in trade negotiations.

The U.S. has maintained a 25% tariff on imports from Canada and Mexico, excluding goods that fall under the United States-Mexico-Canada Agreement. The Trump administration has set August 1 as the deadline for countries to make deals to avoid various tariff rates.

India's Existing Trade Agreements

Despite holding out on a deal with the U.S., India is actively engaged in trade negotiations with other countries and blocs. India is negotiating Free Trade Agreements (FTAs) with the UK, Canada, and the EU, targeting sectors like services, digital trade, and sustainable development. A landmark Free Trade Agreement (FTA) between India and the United Kingdom was finalized on May 6, 2025, and is set to increase bilateral trade by an estimated £25.5 billion. India and the U.K. will sign a free trade agreement on Thursday (July 24, 2025) in London that will allow export of labor-intensive products such as leather, footwear and clothing at concessional rates, while making imports of whisky and cars from Britain cheaper. The pact also helps double trade between the two economies to $120 billion by 2030.

India is also party to several other trade agreements, including those with MERCOSUR, ASEAN, Japan, South Korea, and Singapore. These agreements aim to reduce tariffs and promote trade between India and its partners.