Reciprocal tariffs cut to 18%: Trump signals breakthrough in US-India trade after call with PM Modi

US President Donald Trump announced a major shift in trade relations with India, claiming that Washington and New Delhi have agreed to reduce reciprocal tariffs and deepen economic cooperation following a conversation with Prime Minister Narendra Modi. 

In a post on his Truth Social platform on February 2, Trump said the United States would lower reciprocal tariffs on Indian goods from 25% to 18%, while India would move to eliminate its tariffs and non-tariff barriers on US products. The announcement, made with immediate effect according to Trump, marks a sharp turn from months of heightened trade friction between the two countries. 

Calling Modi “one of my greatest friends” and a “powerful and respected leader,” Trump said the agreement reflected mutual trust and a shared commitment to getting results. 

Trump said discussions with the Indian Prime minister extended beyond tariffs, touching on energy, geopolitics and global security. A central element of the claimed understanding involves India reducing its purchases of Russian oil and instead buying more energy from the United States and, potentially, Venezuela.  

According to Trump, the shift in India’s oil sourcing is aimed at cutting off revenue streams that support Russia’s war with Ukraine. He framed the move as a contribution toward ending the conflict, which he said continues to claim thousands of lives each week.  

The US President also said Modi committed to a significantly expanded “Buy American” approach, with India expected to purchase more than $500 billion worth of US energy, technology, agricultural goods, coal and other products over time. Trump described the scale of the proposed buying as unprecedented and a win for American industry. 

PM Modi in a post on X (formally twitter) wrote, “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation. President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace.”

The announcement suggests a possible thaw after a period of strained trade ties, during which Washington had imposed steep duties on Indian exports and repeatedly criticised New Delhi’s trade barriers and energy links with Russia. 

A White House official told Reuters that the US was rescinding a punitive, 25% duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25% “reciprocal” tariff rate.

If formalised, the tariff cuts could ease pressure on Indian exporters while improving access for US firms to one of the world’s fastest-growing markets. A reorientation of India’s energy imports could also have far-reaching implications for global oil markets and the broader geopolitical balance around the Ukraine war. 

US Ambassador Sergio Gor, who had shared a teaser on the two leaders interaction earlier, in a post on X (formally twitter) wrote, “As I have said many times, President Trump genuinely considers Prime Minister Modi a great friend! Thrilled by the news of the trade deal this evening. The relationship between the United States and India has LIMITLESS POTENTIAL!”.