India-US Trade Deal Finalised: Tariffs Cut to 18%, Major Boost to Bilateral Trade

-Aditya Amitabh Trivedii 

New Delhi : In a major development shaping global trade dynamics, the United States and India have announced a bilateral trade agreement that significantly alters tariff structures and energy purchasing patterns between the two nations. The agreement follows months of negotiations that had seen tensions escalate over elevated U.S. tariffs on Indian goods linked to India’s imports of Russian crude oil. The new deal aims to reset economic cooperation with immediate tariff adjustments and commitments on both sides. 

U.S. President Donald Trump announced on Monday that a trade deal with India has been finalised after his telephone conversation with Prime Minister Narendra Modi. According to Trump, under the agreement the United States will reduce its “reciprocal tariff” on Indian goods from 25 per cent to 18 per cent with immediate effect. Trump also stated that India would move forward to reduce its tariffs and non-tariff barriers against U.S. goods to zero. 

President Trump’s full statement on Truth Social highlighted the personal rapport with Prime Minister Modi, saying:

“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. We spoke about many things, including Trade, and ending the War with Russia and Ukraine. He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!” 

Confirming the development, Prime Minister Modi posted on X: “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. 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. President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights.” 

As part of the pact, Trump stated that India has committed to halting purchases of Russian oil and significantly boosting purchases of U.S. goods across sectors including energy, technology, agriculture and coal, with planned procurements exceeding $500 billion. Modi also reaffirmed India’s support for deeper economic collaboration and shared goals of strengthening bilateral relations. 

The India-U.S. trade agreement marks a significant shift in trade policy and diplomatic engagement, easing tariff barriers and aligning aspects of energy sourcing with broader geopolitical considerations. Both countries have positioned the deal as a step toward deeper partnership and reciprocal economic benefit, even as questions remain about the full implementation and broader impact of the commitments made.