Trump announces sweeping US-India trade deal after Modi call, cutting tariffs and ending Russian oil ties
The United States and India have reached a major trade agreement following a phone call between US President Donald Trump and Indian Prime Minister Narendra Modi, marking a significant shift in economic relations between the two countries.
President Trump announced the deal on his social media platform, stating that the US will lower tariffs on Indian goods to 18%, down from 25%. A separate 25% penalty tariff imposed over India’s continued purchases of Russian oil will also be removed. According to Trump, the agreement represents a decisive step toward reshaping trade ties between Washington and New Delhi.
In exchange, Trump said India has agreed to reduce both tariff and non-tariff trade barriers on American goods to zero and will stop buying oil from Russia. He added that India is committed to purchasing more than $500bn worth of US products, including energy, technology, agricultural goods, and coal.
Trump said the trade agreement was reached during a morning phone call that also included discussions on the Russia-Ukraine war. He described the outcome as an immediate deal agreed at Modi’s request and portrayed it as a win for American exporters.
Prime Minister Modi welcomed the announcement, saying he was “delighted” that an agreement had been reached. He praised the partnership between the two countries, stating that cooperation between the world’s largest democracies would unlock opportunities for mutual benefit.
The deal comes after a period of strained trade relations between the US and India. In August, the United States imposed tariffs of up to 50% on Indian goods, the highest rate applied to any Asian country. Those tariffs included a penalty linked specifically to India’s refusal to stop purchasing Russian oil.
Indian exports to the US fell sharply after the tariffs took effect, prompting officials in Delhi to seek new trade partnerships. Just days before Trump’s announcement, India and the European Union unveiled a free trade agreement aimed at reducing taxes on nearly all goods exchanged between the two sides.
A White House official confirmed that the Russian oil-linked penalty tariffs would be dropped as part of the US-India agreement and that overall tariff levels would be reduced to 18%.
Trump said Modi also agreed to buy significantly more oil from the United States and potentially from Venezuela. He framed the agreement as part of a broader effort to realign global trade relationships and reduce reliance on Russia.
The announcement triggered a positive reaction in financial markets, with US stocks edging higher following Trump’s statement. Analysts said investors viewed the deal as a signal of easing trade tensions and renewed economic cooperation.
However, not everyone welcomed the agreement. A coalition of US small businesses criticised the deal, arguing that the new tariff rate remains significantly higher than pre-tariff levels. The group said American importers previously paid an average of 2.5% on Indian goods and warned the agreement locks in higher costs.
Trump dismissed criticism, insisting the deal strengthens US leverage and delivers long-term economic benefits. He also pointed to similar warnings issued to other countries considering closer trade ties with China, reinforcing his administration’s tough stance on global trade alignment.
The agreement marks one of the most significant trade announcements of Trump’s current term and signals a shift in India’s economic positioning as it navigates relations with the US, Europe and Russia.