From Soybean to Dairy: Commodities in the Crosshairs of US-India Trade Talks

Five rounds of trade talks between the U.S. and India have failed to clear up differences regarding agricultural commodities, with both sides pushing for an Aug. 1 deadline before Washington will be able to reinstate a 26% tariff on Indian exports. After many months of talks, neither country has completed an interim trade deal.

One of the major challenges in the negotiations has been access to agricultural markets. Washington has called for India to remove restrictions on goods such as soybeans, corn, dairy, poultry and genetically modified crops, in addition to apples and tree nuts, and New Delhi has said that a few of the commodities must remain banned due to food security issues and the livelihoods of hundreds of millions of farmers.

India’s trade delegation, led by chief negotiator Rajesh Agrawal, returned from Washington after a fifth round of talks without a breakthrough. One Indian government source told Reuters that reaching an interim agreement before Aug. 1 “looks difficult.”

Why Agricultural Commodities are Central to the Talks

The United States has pushed for greater access to India’s consumer market as American agricultural exports have weakened in recent years.

Soybean exports dropped from $34.4 billion in 2022 to $24.5 billion in 2024, and corn exports dropped from $18.6 billion to $13.9 billion during the same time period, according to U.S. trade data. The slowdown also helped the U.S. agricultural trade deficit grow and led to a greater demand from the U.S. to boost exports to key foreign markets like India.

Earlier this year, U.S. Trade Representative Jamieson Greer indicated negotiations were looking at cutting tariffs on products such as tree nuts, wine, spirits, fruits and vegetables. But issues like commodities, soybeans, dairy, rice, sugar, and beef have been some of the most challenging ones in the talks.

Agriculture Secretary Brooke Rollins also has stated that the Administration would support a trade deal that would increase the export of American agricultural products to India.

India’s Red Lines Remain Unchanged

India has consistently refused to offer tariff concessions on several farm products that it considers strategically important.

Finance Minister Nirmala Sitharaman recently described agriculture and dairy as “big red lines,” saying the government must exercise a high degree of caution while pursuing any agreement that serves India’s national interest.

Commerce and Industry Minister Piyush Goyal has also said products adequately produced in India, including maize, wheat, rice, sugar, soybeans and poultry, have been excluded from tariff concessions to protect domestic farmers.

India has never opened its dairy market under any free trade agreement. The sector remains politically sensitive following nationwide farmer protests that prompted Prime Minister Narendra Modi’s government to repeal three agricultural reform laws in 2021.

Commodities That Could Still See Lower Tariffs

Despite disagreements over major farm sectors, negotiators have identified several agricultural products where tariff reductions remain possible.

The framework discussed earlier this year includes potential tariff cuts on dried distillers’ grains, red sorghum, soybean oil, certain pulses, tree nuts, fresh and processed fruits, wine and spirits.

Goyal has described India’s concession on dried distillers’ grains as a limited opening designed to support growing demand from the country’s livestock and poultry industries.

Indian agricultural exporters could also benefit from expanded access to the U.S. market under the proposed framework. Products including spices, tea, coffee, cashew nuts, mangoes, bananas, avocados, kiwis and papayas are among those expected to receive lower or zero duties if an agreement is finalized.

Other Trade Issues Continue to Delay a Deal

Agriculture is not the only unresolved issue.

India is also seeking relief from higher U.S. tariffs on steel, aluminum and automobiles. Officials have discussed whether those disputes could be addressed separately to allow an interim trade agreement to move forward.

Speaking after signing a trade agreement with the United Kingdom, Goyal said India was making “fantastic progress” in negotiations with Washington and expressed hope that both countries could conclude a “very consequential partnership.” He declined to discuss specific negotiations involving agriculture and dairy, saying only that such discussions take place “in the negotiation room.”

What Comes Next

President Donald Trump announced a 26% tariff on Indian imports in April before suspending the measure to allow additional negotiations. That pause is set to expire on Aug. 1 unless both countries reach an agreement or Washington extends the deadline.

The broader trade framework aims to increase bilateral trade to $500 billion by 2030 from about $190 billion currently. Whether negotiators can bridge differences over agricultural commodities is expected to determine both the timing and scope of any interim agreement.