India Secures Trade Advantage as US Slashes Tariffs to 18%, Outpacing China, Bangladesh

India has secured a tariff advantage over several regional export competitors after the United States reduced duties on Indian goods to 18% under a newly announced bilateral trade deal. The decision follows direct talks between the 2 countries’ leaders and takes effect immediately. 

Tariff Revision and Deal Announcement 

US President Donald Trump announced that US and India have agreed to a trade arrangement under which the reciprocal tariff on Indian imports has been reduced from 25% to 18%.  

He described the move as being made “out of friendship and respect” following his conversation with Prime Minister Narendra Modi. The US administration also indicated that additional penalty tariffs linked to India’s Russian oil purchases would be withdrawn as part of the arrangement. 

Regional Tariff Comparison Advantage 

With the revised structure, India now faces lower US tariff rates than several competing export economies.  

Indonesia is subject to around 19% tariffs, while Bangladesh and Vietnam face about 20% each. Pakistan’s rate stands near 19%, whereas tariffs on Chinese goods remain significantly higher at roughly 34%.  

This differential improves India’s relative price competitiveness in the US market across multiple export categories. 

Impact and Outlook 

The lower tariff rate is expected to support Indian exporters, especially in manufacturing and value-added goods, while also strengthening trade momentum between the 2 countries. Both sides have indicated that further steps may follow on reducing non-tariff barriers and expanding bilateral trade flows. 

Read More: India, US Agree on Trade Deal, Lowering Reciprocal Tariffs to 18%! 

Conclusion 

The tariff cut to 18% positions Indian exports more favourably in the US market and marks a significant step forward in India–US trade relations. 

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