US Pushes Market Reforms on India and Brazil Amid Tariff Pressure

(NEW DELHI / WASHINGTON, D.C.) The United States has increased pressure on India and Brazil in 2025 with sharp new tariffs and firm demands for wider market access, signaling a tougher phase in trade talks that have already tested political ties and business confidence. U.S. Commerce Secretary Howard Lutnick criticized both countries for what he called “closed” markets and warned that unless real changes follow, access to the American consumer market could narrow further. The message, delivered alongside a string of tariff moves over the past two months, has set the tone for high-stakes negotiations playing out in Washington and across major export sectors in India and Brazil.

Washington’s stance and Lutnick’s message

Lutnick’s remarks were blunt and personal. He said India, Brazil, and Switzerland “need fixing” to align with U.S. trade interests and argued that these governments should “open their markets, stop actions that harm America.” The Commerce Secretary also laid out a view that the United States will reward early concessions with better terms:

“The first deal is always the best one. Then the next deal is higher… the next deal’s higher…”

The comments come as the administration under President Trump continues to use tariffs to push for changes in how large emerging economies treat U.S. goods, services, and intellectual property.

Tariff actions and timelines

• For India:
  • 50% tariff on most Indian exports, effective August 27, 2025.
  • An added 25% penalty tied to India’s continued imports of Russian oil.
  • The Indian pharmaceutical industry faces a 100% duty on certain branded and patented drugs—critical because the sector earns roughly 40% of its revenue from U.S. markets.
• For Brazil:
  • 50% tariff took effect on August 6, 2025, up from a 10% baseline earlier in the year.
  • The increase reflects both long-running trade disputes and political tensions involving Brasília, including disagreements tied to treatment of former President Jair Bolsonaro.
• Broader U.S. moves in 2025:
  • 15% tariff on certain goods from the European Union, effective July 27, 2025.
  • Tariffs on Canada rose to 35% on July 10, 2025.
  • A truce with China was extended on August 12, 2025, showing selective pauses alongside pressure.

The U.S. has also suspended the de minimis exemption for many low-value shipments, increasing paperwork and costs for exporters worldwide.

Responses from India

India’s government insists it remains committed to talks and diplomacy while defending policy choices it views as driven by national interest—especially energy purchases influenced by market prices.

• A high-level Indian delegation led by Commerce and Industry Minister Piyush Goyal visited Washington from September 22–24, 2025.
• Meetings included U.S. Trade Representative Ambassador Jamieson Greer and Ambassador-designate to India Sergio Gor.
• India’s Commerce Ministry called the exchanges “constructive,” with both sides exploring the possible structure and scope of a bilateral trade agreement and agreeing to continue engagement.

Indian officials also met U.S. companies and investors to underline confidence in India’s growth path and openness to foreign investment.

Responses from Brazil

Brazil’s reaction focused on cushioning exporters and preserving options for negotiation.

• Brasília rolled out an aid package for impacted sectors and has not ruled out reciprocal steps.
• Some goods received exemptions, reducing effective average tariff rates for certain shipments, but the overall impact remains severe.
• Officials emphasize defending national interests while keeping dialogue channels open.

Exporters in agriculture, manufacturing, and services are assessing how much cost they can absorb and whether to pass increases to buyers.

Stakes and goals

The stakes are large for India, whose biggest trading partner is the United States.

• Bilateral trade was USD 131.84 billion in 2024–25.
• Previously, both sides hoped to more than double that to USD 500 billion by 2030.
• That target now depends on resolving differences over tariffs, non-tariff barriers (regulatory measures), and rules for intellectual property and investment.

For the United States, priorities include shrinking trade gaps, protecting rights for U.S. firms, and pushing large economies to accept deeper structural reforms.

Geopolitics and the Russia link

Lutnick’s remarks suggest Washington may link U.S. market access to broader alignment, including reduced ties with Russia. India’s purchases of discounted Russian oil have been targeted by U.S. officials and now factor into tariff penalties.

• India’s 50% tariff rate paired with a 25% penalty related to Russian oil imports highlights how trade and energy policy are being combined.
• Indian officials insist energy policy is driven by price and security needs rather than politics.

In Brazil’s case, the tariff surge is tied to both market access questions and political disputes, showing commercial and diplomatic tracks intertwined.

Sectoral impacts and business reactions

• Indian pharmaceuticals: With roughly 40% of sector revenue tied to the U.S., a 100% duty on some branded and patented drugs threatens growth plans, investment decisions, and R&D pipelines aimed at the American market.
• Brazilian exporters: The jump from 10% to 50% is like a sudden tax increase. Governments’ aid measures can help short-term, but market access is the longer-term issue.

Businesses are pursuing multiple strategies:
– Diversifying markets
– Adjusting product lines to lower tariff exposure
– Hedging through pricing or supply-chain changes
– Some firms betting talks will deliver by late 2025

Across sectors, companies seek clarity on how long current rates will last and whether exemptions can expand.

Negotiation dynamics and possible sequencing

Both India and Brazil have incentives to pursue phased deals that offer early wins and protect sensitive sectors.

Possible elements of a phased approach:
1. A first tranche covering tariffs on select goods, timelines for easing non-tariff barriers, and pilot projects to speed approvals in sectors like health, tech, or agriculture.
2. Later tranches tackling tougher areas—pricing, standards, intellectual property—where domestic politics are stronger.

The U.S. approach: reward early movers with better terms; raise the bar for those who delay.

Trade rules, compliance, and friction

Washington has also tightened compliance rules—such as the de minimis threshold for low-value shipments—raising costs and paperwork for e-commerce and small exporters in India and Brazil. Combined with higher tariffs, this represents a step-change in the cost of selling into the U.S. market.

Political narratives and domestic politics

• In India: Any deal will likely be framed as protecting growth and jobs while easing trade tensions with a key partner.
• In Brazil: The government will aim to show firmness while delivering relief to exporters.
• In Washington: The administration will highlight tough measures that brought partners to the table.

The political cost of concessions can harden domestic opposition and complicate final agreement stages—often described by negotiators as “the last 10%” of a deal.

What to watch next

• Whether a first tranche is possible by late 2025 depends on handling the toughest questions: the energy purchase–tariff penalty link and the scope of regulatory and intellectual property changes.
• India’s Commerce and Industry Ministry called the September exchanges “constructive,” indicating technical work may continue on tariff lines, regulatory approvals, and timelines.
• Brazil’s channel with Washington remains open, with aid to cushion exporters while negotiations proceed.

For official updates:
– See the Office of the United States Trade Representative: https://ustr.gov
– India’s Commerce Ministry statements outline New Delhi’s public stance and describe continued engagement after the September meetings.
– Analysis by VisaVerge.com highlights business interest in tariff swings and market-access terms that reshape export planning.

Key takeaways

• High tariffs now, better terms for early concessions, and stricter terms later is the framework shaping U.S. negotiations in 2025.
• India and Brazil must weigh U.S. market access benefits against domestic pressures to protect industries and preserve policy space.
• The U.S. seeks wider market access and stronger rules for American firms; India and Brazil aim to protect jobs and development priorities while securing tariff relief.

For now, exporters in India and Brazil are adjusting, officials are trading proposals, and the tariff clock keeps ticking. The talks in late September show that channels remain open; Washington’s sharp rhetoric shows patience is short. The coming weeks will determine whether a narrow, phased deal emerges or whether the impasse deepens—affecting supply chains, investment plans, and political calculations in all three capitals.