China Trade Deal Extension Likely Next Week But India Trade Deal by August No Longer So Likely

India Deal by August 1st Now Looks Less Likely

Last week, we looked at three potential trade deals: one likely, one unlikely, and one iffy to happen before the August 1st tariff hike deadline. India came in as the likely deal to happen. Less than a week later, that deal looks less likely to happen by next month, according to a Reuters article by Manoj Kumar, citing unnamed Indian government sources:

The prospects of an interim trade deal between India and the United States before Washington’s August 1 deadline have dimmed, as talks remain deadlocked over tariff cuts on key agricultural and dairy products, two Indian government sources said.

As we talked about last week, India had a trade delegation in Washington; however, they left without a deal. We mentioned the Trump Administration’s desire for India to open up for U.S. agricultural and dairy exports as a well-reported sticking point to the deal. That appears to still top the list of issues for the deal, and one of Kumar’s Indian government sources sees getting a deal done before the deadline as difficult. Here’s what Kumar wrote:

“An interim deal before August 1 looks difficult, though virtual discussions are ongoing,” one of the Indian government sources said, adding a U.S. delegation was expected to visit New Delhi soon to continue negotiations.

Talks are stalled as New Delhi is refusing to open its politically-sensitive agriculture and dairy sectors, while Washington is resisting India’s demand for relief from higher tariffs on steel, aluminium and autos.

Officials are exploring if these issues can be deferred to a later stage, after an interim deal, the second Indian official said.

I don’t love the term “stalled” when describing the talks because they are continuing virtually after India’s delegation left Washington, and sometimes “stalled” is used to describe negotiations when parties have stopped talking. Despite the pessimistic outlook for a deal by August, the government officials do sound optimistic about trade deal between the U.S. and India getting done.

Indian officials remain hopeful of clinching a broader deal by September or October, in line with what was agreed by Prime Minister Narendra Modi and Trump in February.

“Given that there have been five rounds of negotiations and another U.S. delegation is expected, we remain optimistic about finalising a trade pact,” a third government source said.

Ultimately, the India trade deal now has to fall out of the likely to happen by August 1st column.

However, given that negotiations seem to be continuing in good faith, I still wouldn’t be surprised by a deal before August over a couple less contentious issues that defers those tougher ones to a broader deal with the August tariff increase on India pushed back to September or October to complete the larger trade deal. That would be something like the current trade deal with China. Speaking of which…

Secretary Bessent to Work Out “Likely” Extension to Trade Deal Chinese Officials Next Week

The current trade deal with China expires on August 12th. A new deal or extension needs to be agreed to by then to keep U.S. tariffs on Chinese goods from returning to 145% and Chinese tariffs on U.S. goods from returning to 125%. Secretary of Treasury Scott Bessent will be meeting with Chinese officials next week, and it looks like there will be an extension, according to his widely reported words on Fox Business.

Let’s give a different outlet some link love today, quoting from Transport Topics’ article on the subject:

[Bessent said,] “I’m going to be in Stockholm on Monday and Tuesday with my Chinese counterparts and we’ll be working out what is likely an extension then.”

He also said that the negotiations with China can now take on a broader array of topics, potentially including Beijing’s continued purchases of “sanctioned” oil from Russia and Iran.

“Trade is in a very good place with China,” he said. “We’re going to be talking about a lot of the other things that our countries can do together.”

A surprise U.S. government surplus in June, largely driven by President Trump’s tariffs, probably plays a part in his administration feeling so good about the place trade is in with China. That might make the administration happy to keep tariffs where they are with China. That Bessent said he’ll likely be working out an extension with his counterparts and then focused on topics other than tariffs indicates the tariff level with China could stabilize where they currently are for a while.

One last note of interest from Bessent that the article brought up is this:

Bessent also predicted a “rash” of trade deals between now and the Aug. 1 deadline the Trump administration has set.

Secretary Bessent actually said, “We’re about to announce a rash of trade deals in the coming days” rather than between now and August 1st. “Coming days” is much more vague than by the August 1st deadline. He did call that August 1st date “a pretty hard deadline,” but he also said the administration can still negotiate with countries when the tariffs are at a higher level. “As a matter of fact,” Bessent added, “I think President Trump may have created a pretty ingenious strategy here – that if you’re working at the high level, you’re actually going to work faster.”

Things really get murky when talking about trade deal announcements when you consider that President Trump has referred to letters he’s sent to countries informing them of new tariff rates the U.S. will be putting on their goods as trade deals.

Whether the trade deals the secretary of treasury spoke of announcing will happen before or shortly after the August 1st tariff deadline (or even whether those deals are bilateral or unilateral tariff letters), we could have a great deal of trade deal news to talk about in the next week or so.