Truce over tariffs: Modi, Trump reach trade deal
The United States and India have reached a new trade agreement following direct talks between US President Donald Trump and Indian Prime Minister Narendra Modi, signaling a notable shift in bilateral economic and strategic relations.
President Trump announced on Monday that Washington would lower its tariffs on Indian goods to 18 percent, down from 25 percent, offering relief to Indian exporters affected by higher duties in recent years. However, an additional 25 per cent tariff on Indian exports to the US remains in place, as per Trump's Truth Social post.
The announcement was made through posts on Trump’s social media platform, where he highlighted the personal rapport between the two leaders as a driving force behind the deal. Trump said India would also move to eliminate tariffs and non-tariff barriers on US goods.
“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%. They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO,” the US President said.
According to Trump, the agreement includes commitments by India to sharply reduce trade barriers, opening its market further to American energy, technology, agricultural products, and other exports. A key element of the announcement was Trump’s claim that India has agreed to halt purchases of Russian oil. India is currently subject to an additional 25 percent “secondary” tariff due to its continued energy trade with Russia. Trump said India would instead increase oil purchases from the United States and potentially Venezuela, a move he said could help weaken Russia’s war effort.
In a post on Truth Social, Trump said that India had “agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela”, adding that this would “help end the war in Ukraine.”
“Our amazing relationship with India will be even stronger going forward,” Trump wrote, adding that Prime Minister Modi had also committed to significantly expanding imports of American goods. Trump claimed these purchases could exceed $500 billion across multiple sectors.
Prime Minister Modi responded publicly on social media platform X, welcoming the tariff reduction and expressing gratitude to the U.S. President. He described the conversation as positive and productive, while underlining the benefits for Indian manufacturing.
“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,” PM Modi said.
The announcement comes amid heightened global trade activity, with several U.S. partners finalising long-negotiated agreements. Just last week, India and the European Union unveiled a major trade pact after years of talks, reflecting New Delhi’s push to broaden its economic partnerships.
At the same time, Trump has recently issued new tariff threats against allies such as Canada and Mexico as part of a broader effort to reshape US trade policy during his second term. Against that backdrop, the agreement with India stands out as one of the most consequential deals announced so far. U.S. Ambassador to India Sergio Gor confirmed that the two leaders had spoken, posting a brief message on social media ahead of Trump’s announcement. Shortly afterward, Trump shared an image of New Delhi’s India Gate, calling it a “beautiful triumphal arch,” in a symbolic reference to the bilateral relationship.
While both governments have described the agreement as a breakthrough, details regarding implementation and timelines are still awaited. Analysts say the deal’s long-term impact will depend on how swiftly and fully both sides deliver on their commitments.
