THE NEGOTIATIONS over a trade deal with the US may resume only after the additional 25 per cent oil penalty is addressed, according to a senior Commerce and Industry Ministry official.Washington DC was to send a team to New Delhi to continue discussions on August 25, but the talks were ‘halted’ by the US after President Donald Trump projected New Delhi’s purchase of oil from Russia as a big deal breaker. Trump had on August 6 announced the additional 25 per cent tariffs over and above the reciprocal tariffs of 25 per cent.The US’s 50 per cent tariffs on exports from India became effective on Wednesday.The official said the government continues to engage with the US and that only the round of negotiations scheduled for August 25 has been deferred.“We may not be negotiating the trade deal right now but the engagement is still going on. Negotiating the agreement would entail that the additional 25 per cent will have to be first addressed. Because if we do a trade deal and the additional tariffs are still there, it will not make sense for our exporters,” the official said.For instance, it is learnt that trade issues were discussed during the virtual US-India 2+2 Intersessional Dialogue that took place earlier this week. On August 26, Senior Bureau Official for the Bureau of South and Central Asian Affairs Bethany P. Morrison and Acting Assistant Secretary of Defense for Indo-Pacific Security Affairs Jedidiah P. Royal co-chaired the virtual U.S.-India 2+2 Intersessional Dialogue Nagaraj Naidu Kakanur, Additional Secretary, Ministry of External Affairs, and Vishwesh Negi, Joint Secretary, Ministry of Defense.Read | Govt weighs relief package to help Indian companies battle Trump tariffsWith tariffs kicking in and hurting exporters to the US, the Commerce and Industry Ministry is also evaluating measures to address the short-term liquidity crunch that the industry, sources in the Commerce and Industry Ministry said. India exported goods worth $87 billion to the US in 2024-25. The Finance Ministry has estimated that the new tariffs would affect 55 per cent of these exports.Story continues below this ad“The industry expects their orders from the US to slow down now, and this will result in a liquidity crunch. There are several companies that I know of that are completely dependent on the US market and there will be challenges in the textile, chemicals and other sectors. The industry has sought measures similar to those announced during the Covid-19 period. The government is seized of the issue and there is very positive work going on. The issue of liquidity and how to address it is on the agenda,” the Commerce and Industry Ministry official said.The official explained that the government is evaluating measures that “enable the industry to carry out operations” but “not in the form of subsidy.” “A relief package can be announced but the government is aiming to do something for the long-term benefit. We can announce a package but if the offtake is not good it will not take off. So the measures are being carefully looked at,” the official said.This comes as a delegation of the Federation of Indian Export Organisations (FIEO), led by its President, S C Ralhan, on Thursday met Finance Minister Nirmala Sitharaman “to apprise her of the challenges faced by Indian exporters due to the recent escalation of tariffs imposed by the United States”.“Ralhan highlighted the immediate concerns of the exporting community, particularly the adverse impact of higher tariffs on market access, competitiveness, and employment generation. He underscored the need for quick and calibrated policy measures to mitigate the strain on India’s exporters, who have been key drivers of growth and job creation. The Finance Minister has reassured the delegation that the government stands firmly behind Indian exporters in this hour,” FIEO said in a statement.Story continues below this adAn industry source said they have asked the government to relaunch the Merchandise Exports from India Scheme (MEIS), which was phased out as it was not WTO-compliant. But with the WTO nearly ineffective, a scheme along the lines of MEIS could be a good short-term solution. “Under this we have proposed that the industry and the government share the tariffs and take a 15 per cent hit each. That will help bring the effective tariff rate to 20 per cent, a number comparable to other countries,” the source said.However, the official added that the prevailing situation is a “wake-up call” for exporters as well as the industry. “The government and the industry have realised the importance of resilience of the supply chain. In export and in import we are overly dependent on certain geographies. It is a wake-up call for all of us. We have to ensure how to sell more to the world in a diversified manner,” the official said.