Mumbai: President Donald Trump announced on Monday that the United States will reduce its reciprocal tariff on imports from India from 25 per cent to 18 per cent, following a phone call with Indian Prime Minister Narendra Modi, signalling a potential thaw in bilateral economic relations after months of tensions.
In a post on his social platform, Trump described the agreement as a gesture of “friendship and respect” for PM Modi, emphasising the personal rapport between the two leaders.
The announcement came after previous trade friction that saw the United States impose steep tariffs on Indian exports, in part tied to New Delhi’s continued purchases of Russian crude oil – a point of contention as Washington seeks to isolate Russia economically amid the ongoing war in Ukraine.
Key Elements of the Deal
🔹 Tariff Reduction:
The U.S. will immediately lower its reciprocal tariff on Indian goods from 25 % to 18 %, aimed at reducing trade barriers that had strained ties with New Delhi.
🔹 Energy Commitments:
Trump stated that PM Modi agreed to halt India’s purchases of Russian oil and instead increase energy imports from the U.S., and potentially from Venezuela, as part of a broader energy partnership.
🔹 India’s Market Access:
According to the U.S. announcement, India will work toward zero tariffs and non-tariff barriers on American goods, reflecting a reciprocal opening of its market to U.S. exports.
🔹 Purchase Pledge:
Trump claimed India had pledged to purchase over $500 billion worth of American products, including energy, technology, agriculture, and coal.
Geopolitical and Economic Context
The trade announcement comes against the backdrop of broader U.S. efforts to reshape global trade ties and pressurise nations viewed as indirectly supporting Russia’s war effort through energy purchases. Trump linked the shift in India’s oil sourcing to efforts aimed at helping end the conflict in Ukraine, though analysts note the actual implementation and Indian official response remain to be fully clarified.
This development follows months of negotiations that saw the United States imposing some of the highest tariffs globally on Indian exports, contributing to tension between the world’s two largest democracies.
Reactions and Next Steps
As of Monday night, New Delhi had not issued an official detailed statement confirming all aspects of Trump’s announcement, and details of how the tariff reductions and energy commitments will be formalised remain forthcoming.
The unfolding agreement could mark a pivotal shift in U.S.–India economic relations, with potential implications for global supply chains, geopolitical alignments, and energy markets—especially if India follows through on shifting away from Russian energy sources.
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