US President Donald Trump announced he has agreed to a trade deal with Narendra Modi that will cut US tariffs on Indian goods to 18% from previous levels and is tied to India’s commitment to stop buying Russian oil, following months of trade tensions between the two countries.
Tariff Reductions And Commitments
In a post on Truth Social and confirmed by White House officials, President Trump said the United States will reduce its reciprocal tariffs on Indian imports to 18%, dropping punitive tariffs linked to New Delhi’s purchase of Russian crude. The agreement also includes provisions that India will lower its own tariffs and non-tariff barriers against the US to zero. Modi said on X that he is “delighted” that Indian products will now face reduced tariffs in the US.
According to the Reuters report, the revised tariff structure replaces a 50% combined rate that had been imposed through both a 25% base tariff and an additional 25% surcharge aimed at pressuring India over its energy ties with Russia. Under the new deal, the 25% Russia-linked penalty will be rescinded and the overall tariff rate on Indian goods set at 18%.
Trade And Energy Purchases
Trump said in his social media post that Modi agreed during a phone call to stop buying Russian oil and to increase purchases of American energy, including oil, and potentially from Venezuela. Trump also said India would buy more than $500bn worth of US goods spanning energy, technology, agriculture, and coal products. Modi welcomed the announcement and thanked Trump “on behalf of the 1.4 billion people of India.”
Market Reaction And Strategic Context
The news of the agreement boosted investor confidence, with Indian stock markets rising and the Indian rupee strengthening against the US dollar after the announcement. Analysts noted that reducing tariffs and restoring trade ties could help stabilise markets after previous strains.
The deal arrives less than a week after India and the European Union agreed on a major free trade agreement that would cut tariffs on most goods between India and EU countries, reflecting India’s expanding global trade engagement.
Reactions And Criticism
Some business groups in the United States welcomed progress toward market-opening agreements, while others criticised the tariff levels. A coalition of around 800 US small businesses said that even with the reductions, the new 18% tariff rate remains significantly higher than pre-tariff levels experienced before Trump’s tariff regime was imposed.
Featured image credits: Flickr
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