The United States has agreed to reduce the reciprocal tariff it levies on India from 50% to 18% in a major improvement in bilateral economic ties. The development comes after a telephone conversation between US President Donald Trump and Prime Minister Narendra Modi earlier in the day.
The announcement, first made by the US President, marks a significant shift in India-US trade policy following months of tariff-driven trade tensions. Washington had slapped 25% import tax on Indian goods as part of its Liberation Day tariffs last year, and an additional 25% for New Delhi’s import of Russian oil, making India among the highest tariffed countries.
In a statement posted on social media, Trump said he had discussed “many things, including trade, and ending the war with Russia and Ukraine” with PM Modi. He said the discussions had resulted in what he termed a trade deal between the two countries.
According to the US president, PM Modi has agreed to halt purchases of Russian oil and instead expand energy imports from the United States and possibly Venezuela, a shift Trump suggested could help end the ongoing conflict in Ukraine.
PM Modi terms it push for Make in India
PM Modi thanked Trump, announcing that the move will provide a significant push to the Make in India initiative.
“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,” PM Modi said.
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“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation. I look forward to working closely with him to take our partnership to unprecedented heights” he said.
India will buy Venezuelan crude oil: Trump
This comes a day after the Trump said that New Delhi will be purchasing crude oil from Venezuela instead of Iran and a deal towards this end was in place.
What Trump announced on Monday
US President Trump first announced the agreement on a trade deal between Washington and New Delhi.
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Here is the full statement: “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%. They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO. 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. 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! PRESIDENT DONALD J. TRUMP”.
The announcement comes after the newly-appointed Ambassador to India, Sergio Gor, said US President Trump spoke with Prime Minister Narendra Modi.
