US announces trade deal with India, slashes tariffs to 18%

03 Feb '26

3 min read

US announces trade deal with India, slashes tariffs to 18%

Prime Minister Narendra Modi (L) with US President Donald Trump at the Howdy Modi, in Houston in 2019. Pic: Shutterstock/YashSD

Insights

India and the US have reached a trade agreement under which Washington will cut tariffs on Indian goods to 18 per cent from 25 per cent, while New Delhi will reduce tariffs and non-tariff barriers on US products to zero.
President Donald Trump said the deal also covers energy, technology and agriculture, alongside commitments linked to Russian oil purchases.

India and the US have reached a trade deal that will see Washington lower tariffs on Indian goods to 18 per cent from 25 per cent, marking a significant easing of trade barriers between the two countries. The agreement also envisages India reducing its tariffs and non-tariff barriers on US products to zero, signalling a major reset in bilateral trade relations.

Announcing the development on Truth Social, President Donald Trump said he held talks with India’s Prime Minister Narendra Modi on trade, energy cooperation and the Russia–Ukraine war. Trump said the tariff cut replaces an earlier reciprocal rate of 25 per cent and will take effect immediately.

“It was an Honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and, a Powerful and Respected Leader of his Country,” Trump said in the post, adding that the discussions covered multiple issues, “including Trade, and ending the War with Russia and Ukraine.”

He added that Prime Minister Narendra Modi “agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” describing the move as one that would “help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!”

Trump said that, “Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25 per cent to 18 per cent.” He added that India would “likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO.”

He further stated that the Prime Minister committed to “BUY AMERICAN,” including purchases of “over $500 BILLION DOLLARS of US Energy, Technology, Agricultural, Coal, and many other products.” Trump said, “Our amazing relationship with India will be even stronger going forward,” adding that he and Modi are “two people that GET THINGS DONE.”

“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation. I look forward to working closely with him to take our partnership to unprecedented heights,” PM Modi said in a tweet.

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