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US-India trade deal announced after Trump-Modi call
US President Donald Trump revealed a new trade agreement with India on Tuesday, reducing American tariffs on Indian goods from 50% to 18%. The deal follows a phone conversation with Indian Prime Minister Narendra Modi earlier in the day.
Key terms of the agreement
Under the agreement, India committed to eliminating trade barriers and increasing purchases of US goods by over $500 billion. The deal includes energy, technology, agriculture, and coal products. Trump stated on Truth Social that India would cease imports of Russian oil, shifting instead to US and potentially Venezuelan supplies.
A White House official confirmed to the BBC that tariffs linked to India's Russian oil purchases would be removed, with remaining duties lowered to an 18% rate.
"Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement."
Narendra Modi, Indian Prime Minister
Reactions and market response
US stocks edged higher following the announcement, while analysts described the deal as a strategic move amid growing trade tensions. Terry Haines, founder of Pangaea Policy, called it "an answer to those thinking the EU is flanking or gaining speed on the US on trade."
However, the agreement faced criticism from US business groups. We Pay the Tariffs, a coalition of 800 small businesses, argued that the new 18% rate remains significantly higher than the 2.5% average paid before Trump's tariff policies took effect.
"This 'deal' locks in a rate six times higher than what we were paying a year ago. That's not relief, it's a permanent tax hike."
Dan Anthony, Director, We Pay the Tariffs
Broader trade context
The agreement follows a recent landmark trade deal between India and the European Union, which aims to lower taxes on nearly all goods between India and the 27-member bloc. The EU deal, described by European Commission President Ursula von der Leyen as "the mother of all deals," is expected to double EU exports to India by 2032.
India's exports to the US had declined sharply under the previous 50% tariffs, pushing Delhi to seek alternative partnerships. The new US-India deal may ease some of those pressures while strengthening economic ties between the world's two largest democracies.
