Trump announces US–India trade deal, lowers reciprocal tariffs to 18%

As part of the agreement, the United States will reduce its reciprocal tariff on Indian imports from 25% to 18%, effective immediately.

Trump, in a post on his Truth Social platform, said the deal was reached “out of friendship and respect” for Modi, and added that India has committed to remove tariffs and non-tariff barriers on US goods, bringing them to zero.

"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% to 18%," his post read. 

In his announcement, Trump also said that India has agreed to halt purchases of Russian oil and instead increase energy imports from the US, a move he framed as supportive of efforts to end the ongoing war in Ukraine.

Acknowledging the same, PM Narendra Modi in a post on X, said: "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."

He said when two large economies and the world’s largest democracies work together, it benefits the people and unlocks immense opportunities for mutually beneficial cooperation.

The deal reportedly includes broader commercial commitments, with India expected to significantly expand purchases of American products across sectors such as energy, technology and agriculture.

Several major outlets report that this development follows months of tariff tensions between the two nations, during which the US had imposed steep levies on Indian goods, including penalties linked to Russian oil purchases.

Trump’s announcement of a trade deal with India comes a day after New Delhi unveiled its annual budget, parts of which were aimed at mitigating the impact of the 50 per cent tariff imposed by the US on Indian goods.

The development also coincided with External Affairs Minister S Jaishankar’s departure for the United States to attend a ministerial meeting on critical minerals, underscoring the broader strategic context of the agreement.

Negotiations on the trade deal had slowed significantly after India–US relations deteriorated in August, when Washington imposed steep tariffs in response to India’s continued purchase of Russian oil. The move triggered months of diplomatic and economic friction between the two sides.

The impasse began to ease in September, when President Trump expressed optimism that the issue could be resolved. Momentum picked up in December after Trump and Prime Minister Narendra Modi spoke by phone and reviewed progress in the bilateral partnership.

While no formal announcement was made at the time, both leaders discussed expanding cooperation in critical technologies, energy, defence, security and trade.

In January, US Ambassador to India Sergio Gor said the two countries were moving closer to finalising a trade agreement, setting the stage for the breakthrough announced this week.