India, US Agree on Trade Deal, Lowering Reciprocal Tariffs to 18%

India and the United States have finalised a long-awaited trade agreement following a phone conversation between Prime Minister Narendra Modi and US President Donald Trump, bringing immediate tariff relief for Indian exports. 

Tariff Reduction and Immediate Impact 

President Donald Trump said the two countries have agreed to reduce reciprocal tariffs on Indian imports into the United States to 18% from 25%, with the change taking effect immediately. India had earlier faced tariffs as high as 50%, which included a 25% penalty linked to purchases of Russian oil.  

“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25% to 18%,” Trump said, adding that India would also move to reduce its tariffs and non-tariff barriers against the US to zero. The revised tariff level was confirmed by the US Embassy. 

Commitments and Trade Expansion Plans 

Trump said Modi had committed to a stronger “Buy American” approach, alongside plans to significantly increase purchases from the US. “The Prime Minister also committed to ‘Buy American’ at a much higher level, in addition to over $500 billion of US Energy, Technology, Agricultural, Coal, and many other products,” he said.  

Trump also claimed that Modi agreed to stop buying Russian oil and instead increase purchases from the US and potentially Venezuela, while noting that the two leaders discussed efforts to end the war in Ukraine. 

Negotiation Background and Official Responses 

PM Modi later confirmed the agreement in a post on X, saying, “Delighted that Made in India products will now have a reduced tariff of 18%.” He thanked Trump on behalf of India’s 1.4 billion people and said closer cooperation between the two countries would unlock new opportunities.  

Trade talks between India and US had been underway since early 2025 but were disrupted after the US imposed tariffs of up to 50% on Indian imports in August.  

Read More: India-US Trade Deal: These Stocks and Sectors are Set to Reap Benefits from Reduced Tariffs! 

Conclusion 

The agreement marks a significant reset in India–US trade relations, with immediate tariff reductions and renewed commitments on market access and bilateral commerce following months of stalled negotiations. 

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