Trump and Modi announce trade deal cutting U.S. tariffs to 18%, with India ending Russian oil buys and easing U.S. market access.
03 Feb 2026 | 327 Views | By Autocar Professional Bureau
U.S. President Donald Trump and Indian Prime Minister Narendra Modi on Monday said they had struck a trade agreement that will see U.S. tariffs on Indian imports to 18% from 50% in exchange for India halting Russian oil purchases and lowering trade barriers.
President Trump announced the deal on ...
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U.S. President Donald Trump and Indian Prime Minister Narendra Modi on Monday said they had struck a trade agreement that will see U.S. tariffs on Indian imports to 18% from 50% in exchange for India halting Russian oil purchases and lowering trade barriers.
President Trump announced the deal on Truth Social following a call with PM Modi, noting that India would now buy oil from the U.S. and potentially Venezuela.
The trade agreement between the two nations comes after months of tariff escalation that had seen US duties on Indian products reach some of the highest levels in the world.
“It was an Honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and, a Powerful and Respected Leader of his Country. We spoke about many things, including Trade, and ending the War with Russia and Ukraine. He 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!,” Trump posted on Truth Social.
“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% to 18%. They will likewise move forward to reduce their Tariffs and non-tariff barriers against the United States to ZERO,” Trump said.
PM Modi thanked President Trump on X, formerly known as Twitter, saying that the decision would benefit both countries. “Delighted that Made in India products will now have a reduced tariff of 18%...When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.”
According to a Reuters report, the U.S. was rescinding a punitive 25% duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25% "reciprocal" tariff rate.
Reaction in financial markets was swift. U.S.-listed shares of Indian companies such as Infosys, Wipro and HDFC Bank jumped after the announcement, and broader India-focused funds also rallied on expectations of improved market access.
Trump's announcement added to positive sentiment over semiconductor makers and artificial intelligence, lifting major indexes into positive territory on the day.
Modi also committed India to “BUY AMERICAN at a much higher level, in addition to buying more than $500 billion worth of U.S. energy, including coal, along with technology, agricultural and other products,” Trump added.
Despite the high-profile announcements, key elements of the deal remain vague. Neither side has yet provided a detailed text of the agreement, and timelines for tariff reductions, the scope of trade barrier eliminations, and specific commitments on energy purchases remain unclear.