Trump Announces Trade Deal with India After Year of Tensions- Reuters Reports

US President Donald Trump announced Monday that he has reached a trade agreement with India, with New Delhi also committing to cease Russian oil purchases in favor of American and potentially Venezuelan sources, according to Reuters.

The announcement marks a significant shift in US-India relations following a turbulent year that saw trade ties deteriorate to what sources describe as historic lows.

Reuters reports that between April and August 2025, the Trump administration imposed an initial 25% tariff on Indian goods, followed by an additional 25% levy citing India's purchase of Russian oil. The combined tariffs pushed duties on most Indian exports to the United States to 50%, prompting India to characterize the measures as unfair.

The escalating tensions led to a breakdown in trade diplomacy by mid-2025, according to the report. Negotiations for a bilateral trade agreement stalled as Trump secured deals with Japan and the European Union, and extended favorable terms to Pakistan. Indian Prime Minister Narendra Modi declined a White House invitation following the G7 summit in Canada last June, with Modi citing the need to protect farmers' interests amid disagreements over the agriculture sector.

In response to the strained relationship, India pivoted toward strengthening ties with China and concluded a landmark trade agreement with the European Union, Reuters noted.

Despite the tariffs, Indian merchandise exports to the United States—India's largest export market—continued to grow, with November figures showing a 21% year-on-year increase driven primarily by electronics. However, consumer goods including textiles, jewelry, and auto parts experienced significant declines.

The trade tensions took a toll on Indian financial markets, with equity markets and the rupee ranking as the poorest performers among emerging-market peers in 2025, according to Reuters. Foreign investors conducted record selling throughout the year, a trend that has continued into 2026.