Trump had imposed a punitive 25 percent tariff on India for buying Russian oil on top of the 25 percent ‘reciprocal’ tariff.
United States President Donald Trump has agreed to cut US tariffs on Indian goods from 50 per cent to 18 per cent in exchange for India buying oil from the US and possibly Venezuela, in exchange for reducing trade barriers and ending purchases of Russian oil.
“Out of friendship and respect for Prime Minister Modi and at his request, effective immediately, we agreed to a trade agreement between the United States and India, whereby the United States will charge lower reciprocal tariffs, reducing them from 25% to 18%,” Trump said in a social media post after a phone call with Indian Prime Minister Narendra Modi.
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A White House official told Reuters news agency that the US is withdrawing a punitive, 25 percent tariff on all imports stacked on top of the 25 percent “reciprocal” tariff on Russian oil purchases from India.
Modi has committed to buy more than $500 billion worth of US energy, technology, agriculture and other products, Trump added.
“Delighted to speak with my dear friend President Trump today. Delighted that India will now reduce tariffs by 18% on Made in India products,” Modi said in a social media post on X. “A big thank you to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”
“This deal is definitely a long time coming,” said Rachel Zimba, an adjunct senior fellow at the Center for a New American Society. “Eighteen percent puts it close to the level of Southeast Asian goods in the US.”
But experts also cautioned that it would be too early to say whether it was a trade deal or a tariff agreement.
“Prime Minister Modi welcomed the news, but did not confirm President Trump’s claim that India was reducing tariffs on US goods,” pointed out Vina Nadjibullah, vice-president of research and strategy at Canada’s Asia Pacific Foundation.
A stressful business
The deal comes after tense trade negotiations between the world’s two largest democracies.
Last August, Trump doubled tariffs on imports from India to 50 percent, pressuring New Delhi to stop buying. Russian oilAnd said earlier this month that rates could rise again if it doesn’t curb its purchases.
The purchase of Venezuelan oil will help replace some of the Russian oil bought by India, the world’s third-largest oil importer.
Zimba told Al Jazeera that India has been a buyer of Venezuelan oil for the past few years and as recently as a year ago. “The question will be under what terms and at what cost?”
Since Moscow invaded Ukraine in 2022 and Western nations imposed sanctions on Russian energy exports, India has been heavily dependent on oil imports, meeting about 90 percent of its needs, and importing cheap Russian oil has helped lower its import costs.
Recently, India has started to slow down its oil purchases from Russia. In January, it was around 1.2 million barrels per day (bpd) and is forecast to fall to around 1 million bpd in February and 800,000 bpd in March, according to a Reuters report.
The Indian market has been hit hard since Washington imposed tariffs, with a record inflow of foreign investors in 2025, making it the worst-performing market among emerging nations.
Despite the tariff relief, “India will continue to de-risk and diversify”, a process that began in the wake of punishing US tariffs and strained and unpredictable relations with Washington, Nadjibullah said.
The announced rate cut comes days later A free trade agreement was signed between India and the European Union After nearly two decades of negotiations, it could affect nearly two billion people. The deal would allow free trade between the EU’s 27 members and India on almost all goods, including everything from textiles to medicine, and reduce high import taxes on European wine and cars.