India–US Trade Breakthrough Lowers Tariffs to 18%, Signals New Momentum in Bilateral Ties

• US cuts additional tariffs on Indian goods from 50% to 18%, boosting export competitiveness.

• Key beneficiary sectors include textiles, leather and seafood.

• Announcement followed Modi–Trump phone talks highlighting improved bilateral ties.

• India gains tariff advantage over several Asian economies.

• Energy and Russia-related claims by Trump remain unconfirmed by New Delhi.

After months of strained trade relations, India and the United States have announced a bilateral trade arrangement that eases pressure on Indian exporters and signals renewed momentum in economic ties between the two countries. The agreement, revealed on Monday, will see Washington reduce additional tariffs on Indian goods to 18 per cent from the earlier 50 per cent, a move expected to significantly benefit sectors such as textiles, leather and seafood.

The announcement followed a phone conversation between Prime Minister Narendra Modi and US President Donald Trump. Trump disclosed the development on his social media platform Truth Social, while Modi responded with a post on X, describing the exchange as a “wonderful conversation” with his “dear friend.” Modi thanked Trump on behalf of India’s 1.4 billion people for lowering tariffs on Indian exports, though he did not explicitly reference the trade deal itself in his public remarks.

Notably absent from the Prime Minister’s comments was any response to Trump’s assertion that Modi had agreed to halt India’s purchases of Russian oil and substantially increase energy imports from the United States, and potentially Venezuela. Trump claimed such a shift—along with large-scale purchases of American energy, technology and agricultural products—could contribute to ending the war in Ukraine. New Delhi has not publicly confirmed these specific commitments.

According to Trump, the discussions also included India’s willingness to reduce both tariff and non-tariff barriers on US goods, potentially bringing them down to zero. A spokesperson for the US Embassy confirmed that the final tariff level for Indian imports now stands at 18 per cent, a rate that places India in a more favourable position than several other Asian economies, including Vietnam, Bangladesh, Indonesia, South Korea and China, which continue to face higher duties.

The timing of the announcement is significant. It coincided with External Affairs Minister S. Jaishankar’s visit to the United States for a critical minerals ministerial chaired by Secretary of State Marco Rubio. It also came less than a week after India and the European Union declared the successful conclusion of negotiations on a comprehensive free trade agreement.

In his X post, Modi emphasised the broader strategic value of cooperation between the two countries. “When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” he wrote. He went on to praise Trump’s leadership, calling it essential for global peace, stability and prosperity, and expressed India’s support for peace efforts worldwide.

The trade understanding has not been without controversy. Some members of the Trump administration have made sharp remarks in recent weeks, including criticism directed at the European Union. Trump himself said the agreement with India was reached out of “friendship and respect” for Modi and at the Indian leader’s request, adding that the bilateral relationship would only grow stronger.

Despite the tariff reduction, Trump reiterated that a separate 25 per cent duty linked to India’s past purchases of Russian oil would remain in place. While US officials have previously acknowledged that India has reduced its reliance on Russian energy, the additional tariff has not yet been withdrawn.

Trump also used social media to highlight his rapport with Modi, sharing images of the two leaders and praising him as “a powerful and respected leader” who, like Trump, “gets things done.” In another post, he featured New Delhi’s India Gate—described as “India’s beautiful Triumphal Arch”—while referencing his own ambition to build a similar monument in Washington, DC.

The latest developments suggest renewed traction in India–US economic engagement, particularly after prolonged negotiations that began in February last year. However, key aspects of Trump’s claims—especially regarding energy imports and geopolitical commitments—are yet to receive official confirmation from New Delhi. As both sides move forward, the focus will remain on translating political goodwill into durable and transparent economic outcomes.