US-India Trade Deal Sealed as Trump Cuts Tariffs to 18%

The US-India trade deal took a major step forward on Monday after President Donald Trump announced a sharp cut in reciprocal tariffs on Indian goods, lowering them to 18% from 25%.

Trump shared the news on Truth Social following a phone call with Prime Minister Narendra Modi, calling the agreement a result of “friendship and respect” between the two leaders.

The announcement comes over five months after Washington imposed 50% tariffs on several Indian exports, including a 25% punitive duty linked to India’s purchase of Russian crude oil. Trump said New Delhi has agreed to stop buying Russian oil and instead increase purchases from the US and possibly Venezuela, a move he claimed would help bring an end to the Russia-Ukraine war. He also said India would move to reduce tariffs and non-tariff barriers on US goods to “ZERO.”

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Modi responded on X, thanking Trump “on behalf of the 1.4 billion people of India” and welcoming the reduced 18% tariff on Made in India products. He said stronger cooperation between the world’s largest democracies would unlock major opportunities and praised Trump’s leadership on global peace and stability.

According to Trump, India has also committed to “buy American” at a much higher level, including over $500 billion worth of US energy, technology, agriculture, coal, and other products.

The US-India trade deal is being shaped through two tracks—an early harvest agreement and a broader Bilateral Trade Agreement. Talks began in March and have included several rounds, with negotiations continuing virtually after recent pauses.

Calling the deal a market relief, Nilesh Shah of Kotak Mahindra AMC said it removes pressure on the rupee and financial markets, adding that both countries stand to gain from closer cooperation.