India-US Trade Deal Finalised, Tariffs On Indian Products Down To 18%

In return, India will eliminate the tariffs and non-tariff barriers on US products, which will also allow the entry of GM soyabean, corn, and dairy into the country. India will also buy $500 billion worth of US energy, technology, coal and other products.

US President Donald Trump made the announcement on the social media platform ‘Truth Social’ on Monday after talking to Prime Minister Narendra Modi. According to Trump, Modi agreed to buy oil from the US and Venezuela and stop purchases from Russia, and this has led to the announcement of the deal, which had been hanging in limbo for the past several months.

“He (Narendra Modi) 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 per cent to 18 per cent,” Trump said. The 18 per cent tariff levied on Indian goods is on par with that of many of its Asian peers.

“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 of US energy, Technology, Agricultural, Coal, and many other products,” he added. India’s bilateral goods trade with the US was around $132 billion in FY25.

Modi confirmed in a late-night post that he was delighted that Indian exports “will now have a reduced tariff of 18%” and put out a “big thanks to President Trump”.

“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent. 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. President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights,” Modi posted on the social media platform X.

However, there was no clarity from the Indian side on the other claims made by President Trump.

India was the first country of the US to evince interest in entering a trade deal after Trump threatened its trade partners with reciprocal tariffs in April last year. However, the trade negotiations were prolonged due to India’s reluctance to let US dairy products and genetically modified agricultural products, including soybean and corn.

While talks were on, Trump’s claims of ending the India-Pakistan conflict seem to have strained the ties politically. On July 31, the US revised tariff rates for countries engaged in negotiations except for India. The US tariff for Bangladesh, Cambodia, Malaysia, Pakistan, Sri Lanka, Taiwan, and Thailand was around 19–20 per cent.

After the reciprocal tariffs came into force in the first week of August, the US declared that it would impose an additional 25 per cent tariff on India from August 27 for importing oil from Russia. Since then, India, along with Brazil, has been in the highest tariff bracket of 50 per cent. In the past few months, India finalised trade deals with several economies, including the European Union, the UK, Oman and New Zealand.

Soon after US Ambassador Sergio 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!”

The announcement came even as external affairs minister S. Jaishankar began a three-day visit to the United States starting Monday to participate in the “critical minerals ministerial” convened by US secretary of state Marco Rubio later this week.

In what signifies renewed interest in India-US ties, President Trump put out on social media a picture of the India Gate in New Delhi, which he termed India’s triumphal arch, along with another post of an Indian newsmagazine cover of the two leaders.