Long-standing trade frictions between the world’s two largest democracies have eased following US President Donald Trump’s announcement of a new trade agreement with India. The deal significantly lowers tariffs on Indian exports to the United States, cutting the overall rate from 50% to 18% and giving India a clear competitive edge over several regional and global rivals.
Earlier, Indian exports faced a steep 50% levy, made up of a 25% reciprocal tariff and an additional 25% import penalty. The extra charge was imposed due to India’s purchases of Russian crude oil.
Under the revised agreement, Washington has removed the punitive penalty linked to Russian oil imports, retaining only the reduced reciprocal tariff. As a result, Indian goods entering the US market will now be subject to a much lower 18% tariff.
Confirming the development, a White House official told news agency Reuters that the United States has eliminated the additional charge related to Russian oil, marking a notable shift in its trade stance toward India.
The revised tariff framework places India in a stronger position compared to key export-driven economies such as china, Pakistan, Bangladesh, Vietnam, and Indonesia. With lower duties than many of its competitors, India is now better placed to expand its footprint in the US market.
How India Compares With Other Countries
According to the White House, India’s new 18% tariff rate puts it in a relatively favorable position when measured against a wide range of regional and international exporters.
| Category | Country / Region | US Import Tariff Rate |
|---|---|---|
| Increased Tariffs | China | 37% |
| Brazil | 50% | |
| South Africa | 30% | |
| Myanmar | 40% | |
| Laos | 40% | |
| Reduced Tariffs | European Union | 15% |
| Japan | 15% | |
| South Korea | 15% | |
| Switzerland | 15% | |
| United Kingdom | 10% | |
| Southeast Asia & Neighbours | Bangladesh | 20% |
| Vietnam | 20% | |
| Malaysia | 19% | |
| Cambodia | 19% | |
| Thailand | 19% | |
| Pakistan | 19% | |
| India | India | 18% |
These comparisons clearly show that India now stands much closer to key US allies and trading partners, while enjoying a significant tariff advantage over China and Pakistan.
Trump Announces Tariff Reduction
President Trump announced the tariff reduction in his trademark style on his social media platform, Truth Social.
“It was an Honor to speak with Prime Minister Modi… We spoke about many things, including Trade, and ending the War with Russia and Ukraine,” Trump wrote.
According to Trump, Prime Minister Narendra Modi committed to helping “END THE WAR in Ukraine” by increasing energy and other purchases from the United States and “potentially, Venezuela,” while gradually reducing India’s reliance on Russian oil.
“Our amazing relationship with India will be even stronger going forward,” Trump added.
Recent data appears to support this claim. According to Reuters, India’s crude oil imports from Russia declined to around 1.2 million barrels per day in January and are expected to fall further in the coming months.
PM Modi Welcomes Boost for ‘Made in India’
Prime Minister Narendra Modi welcomed the agreement, calling it a major boost for Indian exports.
“Happy that Made in India products will now have a reduced tariff of 18%,” PM Modi said in a post on X. “On behalf of India’s 1.4 billion citizens, a huge thank you to President Trump.”
The reduced tariffs are expected to benefit a wide range of Indian industries, including manufacturing, textiles, engineering goods, and technology-driven exports.
Key Implementation Details Still Awaited
Despite the high-profile announcements, several aspects of the agreement remain unclear.
President Trump’s post did not specify which US goods India has agreed to purchase, how non-tariff trade barriers will be reduced, or the exact timeline for implementing the new tariff structure.
Officials from both sides have yet to release a detailed framework or formal text of the agreement, leaving businesses and analysts waiting for clarity.
The US–India deal comes just days after India finalized a major trade agreement with the European Union, which is expected to reduce or eliminate tariffs on more than 96% of traded goods, while excluding sensitive agricultural products.
Together, these developments underline India’s growing role in global trade and its strategic positioning as a preferred economic partner for major world powers.
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