India-US Trade Pact Faces Uncertainty Over US Tariff Probe

The proposed interim trade pact between India and the United States faces uncertainty as an ongoing US Section 301 investigation remains a potential risk to India’s tariff outlook. The developments come as President Donald Trump has also threatened tariffs of up to 300% on companies that do not build factories in the United States.

Indian officials said the interim trade pact is an executive-level framework and does not require approval through a vote in the US Congress, despite Democrats winning both chambers in the midterm elections.

However, a US Section 301 investigation into excess industrial capacity across 16 economies, including India, could lead to changes in tariffs before its March 2027 deadline, according to the supplied report.

Ajay Srivastava of the Global Trade Research Initiative said Trump needed a quick trade policy win and suggested that an agreement could be reached within two months. Emkay Global, however, saw less urgency for an early agreement.

Section 301 Investigation Remains a Key Risk

Although the interim pact itself does not require congressional approval, the ongoing investigation remains a significant obstacle to trade certainty. Any changes arising from the investigation could affect the future tariff framework for Indian exporters.

Trump Threatens Higher Tariffs on Companies

Trump has separately threatened tariffs of up to 300% on firms that do not build factories in the United States. The warning adds another layer of uncertainty for companies assessing manufacturing locations and access to the US market.