India, US have a deal, 50% tariffs cut to 18%

Protracted, see-saw negotiations were on since April and the high rate had disadvantaged Indian exports against all its regional and global competitors in the US market.

Monday’s announcement comes days after talks on the India-EU trade deal concluded last week.

While India had started reducing import of Russian oil since September, it began negotiating the deal since February last year after Modi’s visit to the White House. But casting a cloud on these talks was Trump’s subsequent claim that he had brokered the ceasefire between India and Pakistan after the military confrontation in May last year, a claim India rejected including Modi in a phone call to Trump in June last year. That sent ties into a tailspin and the trade deal was the first casualty.

On Monday, the first glimmer of hope came when Gor posted on X at 9.16 pm IST, “President Trump just spoke with Prime Minister Modi. STAY TUNED…”

At 10.28 pm IST, (11.58 am in Washington DC), President Trump announced on Truth Social, “It was an honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and, a Powerful and Respected Leader of his Country. We spoke about many things, including Trade, and ending the War with Russia and Ukraine. He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!”

“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%,” he said.

“They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO,” he said.

“The Prime Minister also committed to ‘BUY AMERICAN,’ at a much higher level, in addition to over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products,” he said.

“Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that GET THINGS DONE, something that cannot be said for most. Thank you for your attention to this matter!” Trump said.

A US embassy spokesperson, in response to questions, said that the 25% tariff for buying Russian oil has been dropped.

At 11.02 pm IST, Prime Minister Narendra Modi posted on X, “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,” he said.

“President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace,” Modi said.

“I look forward to working closely with him to take our partnership to unprecedented heights,” Modi said, tagging @POTUS and @realDonaldTrump.

Trump’s comments flagged three key elements: an agreement on the much-delayed and anticipated trade pact; India has agreed to stop buying Russian oil and will buy American products as part of the $500 billion trade target set in February last year during Modi’s visit to the White House.

Modi’s comments confirmed the 18% reduced tariff but did not publicly refer to the concessions on oil purchases.

However, he acknowledged Trump’s leadership as “vital for global peace, stability, and prosperity” and that “India fully supports his efforts for peace”. Officials said this is the closest to a public acknowledgment that Washington has been waiting for since it claimed credit for the ceasefire, a claim that Trump has reiterated more than 60 times since May last year. Trump and Modi have spoken at least four times since September when the 50% tariffs kicked in and Modi has acknowledged his role in the Israel-Hamas ceasefire.

Modi, however, did not address the point flagged by Trump that India has agreed to stop buying Russian oil. Records, however, show that there’s an unmistakable downward trend in Russian purchases due to sanctions and market constraints apart from its unfavourable political cost. Nor did he mention anything about buying oil from Venezuela — although Trump had said so on Sunday.

The announcement came as External Affairs Minister S Jaishankar embarked Monday on a three-day visit to the US to attend a Washington-led ministerial meeting on the critical minerals supply chain.

Jaishankar’s visit assumes significance as that gives an opportunity for the US President to officially endorse the deal which can be put in force, after legal vetting.

Jaishankar will hold talks with US Secretary of State Marco Rubio and other senior officials of the Trump administration.

An MEA statement that the ministerial will focus on supply chain resilience, clean energy transitions, and strategic cooperation in critical minerals.

Reflecting the positive sentiment, US envoy Gor posted on X, “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!”

Calling it a “big day for India-US relations”, Union Home Minister Amit Shah posted on X. “I congratulate PM @narendramodi and President @realDonaldTrump for this historic deal, which will elevate our strategic partnership and greatly benefit both nations and their people. Business between India and US set to flourish further.”