Trump had imposed a punitive tariff of 25 percent on India for buying Russian oil in addition to the 25 percent ‘reciprocated’ tariff.
United States President Donald Trump has agreed to reduce US tariffs on Indian goods from 50 per cent to 18 per cent in exchange for India reducing trade barriers as well as stopping purchases of Russian oil and buying oil from the US and potentially Venezuela.
“Out of friendship and respect for Prime Minister Modi, and in accordance with his request, effective immediately, we agreed to a trade agreement between the United States and India under which the United States will impose lower reciprocating tariffs, reducing them from 25% to 18%,” Trump said in a social media post after a call with Indian Prime Minister Narendra Modi.
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The US is canceling a 25 per cent punitive duty on all imports from India on purchases of Russian oil, which was on top of a 25 per cent “reciprocal” tariff rate, a White House official told Reuters news agency.
Trump said Modi also committed to buying more than $500 billion worth of American energy, technology, agriculture and other products.
“It was great to speak with my dear friend President Trump today. Glad that products made in India will now have a lower tariff of 18%,” Modi said in a social media post on Twitter. “On behalf of the 1.4 billion people of India, thank you very much to President Trump for this wonderful announcement.”
“It certainly took some time for the deal to come to fruition,” said Rachel Ziemba, adjunct senior fellow at the Center for a New American Society. “Eighteen percent puts it close to the level of Southeast Asian goods in the US.”
But experts also cautioned that it was too early to say whether it was a trade deal or a tariff deal.
“Prime Minister Modi welcomed the news, but did not reiterate President Trump’s claim that India is reducing tariffs on American goods,” said Veena Nadjibulla, vice-president of research and strategy at the Asia Pacific Foundation of Canada. “There seems to be an agreement right now around tariffs and tariff reductions…it’s still a significant breakthrough.”
stressful business
The deal comes after months of tense trade talks between the world’s two largest democracies.
Last August, Trump doubled tariffs on imports from India to 50 percent to pressure New Delhi to stop buying Russian oil, and earlier this month said the rates could rise again if it did not curb its purchases.
The purchase of Venezuelan oil will help replace some of the Russian oil purchased by India, the world’s third-largest oil importer.
Zimba told Al Jazeera that India has been a buyer of Venezuelan oil for years and as recently as a year ago. “The question will be, under what terms and at what cost?”
India is heavily dependent on oil imports to meet about 90 percent of its needs, and imports of cheap Russian oil have helped reduce its import costs after Moscow invaded Ukraine in 2022 and Western countries imposed sanctions on Russian energy exports.
Recently, India has started slowing down its oil purchases from Russia. In January, they were about 1.2 million barrels per day (bpd), and they are expected to decline to about 1 million bpd in February and 800,000 bpd in March, Reuters reports.
Indian markets have been battered since Washington imposed tariffs, making it the worst-performing market among emerging countries with a record outflow of foreign investors in 2025.
Despite the tariff relief, Nadjibullah said, “India will continue to de-risk and diversify”, a process that had begun in the wake of punishing US tariffs and worsening and unpredictable relations with Washington.
The announcement of the tariff cuts comes days after India and the European Union reached a free trade deal that could affect two billion people, after nearly two decades of negotiations. The deal will enable free trade between the 27 EU members and India on almost all goods, including everything from textiles to medicines, and reduce high import taxes for European wine and cars.
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