US President Donald Trump has announced a new trade agreement with India that significantly lowers tariffs on Indian exports to the United States, cutting them from 50 per cent to 18 per cent. The move is expected to ease long-standing trade tensions between the world’s two largest democracies.
Earlier, the 50 per cent tariff included a 25 per cent reciprocal duty along with an additional 25 per cent penalty imposed due to India’s purchase of Russian crude oil. Under the new agreement, the US has removed the Russia-linked penalty, retaining only a revised reciprocal tariff.
A White House official told Reuters that Washington has officially withdrawn the punitive duty related to Russian oil imports, leaving India with the reduced tariff rate.
With the revised structure, India gains a competitive edge over several export-driven economies in the region. Its tariff rate is now lower than those faced by countries such as Indonesia, Bangladesh, Vietnam, China, and Pakistan, giving Indian products a stronger position in the United States market.
How Other Countries Compare
According to the White House, India’s 18 per cent tariff rate places it closer to major United States allies and preferred trading partners.
Countries facing higher United States tariffs include:
- China: 37%
- Brazil: 50%
- South Africa: 30%
- Myanmar: 40%
- Laos: 40%
Countries with lower tariffs include:
- European Union: 15%
- Japan: 15%
- South Korea: 15%
- Switzerland: 15%
- United Kingdom: 10%
- Comparable Southeast Asian rates:
- Bangladesh: 20%
- Vietnam: 20%
- Malaysia: 19%
- Cambodia: 19%
- Thailand: 19%
- Pakistan: 19%
These comparisons highlight India’s improved standing among global exporters to the US.
US President Trump Announces Deal on Social Media
President Trump revealed the agreement on his social media platform Truth Social, stating that he had spoken with Prime Minister Narendra Modi about trade and global issues, including the Russia–Ukraine conflict.
Trump said Modi had agreed to reduce India’s purchases of Russian oil and increase imports from the United States and possibly Venezuela, describing the move as a step toward ending the Ukraine war. He added that US–India relations would continue to strengthen.
India has already begun scaling back Russian oil imports. As per Reuters, purchases declined to around 1.2 million barrels per day in January and are expected to fall further.
Prime Minister Modi welcomed the development, calling it a boost for “Made in India” products. In a post on X, he thanked President Trump and said the reduced tariff would benefit India’s 1.4 billion people.
Key Details Still Unclear
Despite the announcement, several aspects of the agreement remain unspecified. Trump did not indicate when the new tariffs will take effect, which trade barriers will be reduced, or which American products India has committed to purchasing.
Officials from both countries have yet to release a detailed framework of the deal.
The announcement comes shortly after India finalized a major trade agreement with the European Union, which is expected to reduce or eliminate tariffs on more than 96 per cent of traded goods, though sensitive agricultural items were excluded.