US Cuts Reciprocal Tariff on India to 18% From 25% After Major Trade Deal

After months of uncertainty surrounding the India–US trade deal, the two countries have finally reached a breakthrough agreement. Following a phone conversation between Prime Minister Narendra Modi and US President Donald Trump, the United States announced a sharp reduction in tariffs on Indian goods. The decision is expected to provide major relief to Indian exporters and mark a new chapter in bilateral economic relations.

India–US Trade Deal Finalised After Modi–Trump Call

The long-pending trade agreement between India and the United States has finally been sealed. US President Donald Trump announced the deal after a phone conversation with Prime Minister Narendra Modi.

Under the agreement, the total tariff imposed by the US on Indian goods has been reduced from 50% to 18%, offering significant relief to Indian exporters and strengthening trade ties between the two nations.

Key Decision: What Changes Under the India–US Trade Deal?

According to President Trump, India will now face only an 18% reciprocal tariff.

Earlier, the US had:

• Imposed a 25% base tariff on India

• Added an additional 25% penalty in August 2025 over India’s purchase of crude oil from Russia

This had taken the total tariff burden on India to 50%.

Under the new agreement:

• The additional 25% tariff linked to Russian oil purchases will be completely removed

• Only an 18% reciprocal tariff will now apply

Trade Deal Announced on Truth Social

Prime Minister Narendra Modi and President Donald Trump spoke over the phone, after which Trump announced the trade deal at around 10:30 pm on his social media platform Truth Social.

Trump claimed that discussions covered:

• The Russia–Ukraine war

• Energy security

• Global geopolitical issues

He also stated that India agreed to stop purchasing crude oil from Russia.

India to Buy More Oil From the US and Venezuela

According to Trump, India will now increase crude oil imports from the United States. Additionally, both sides agreed to explore the option of importing oil from Venezuela, if required.

The US President said this move would help in efforts to end the Russia–Ukraine war and contribute toward global peace.

‘Buy American’ Policy and $500 Billion Purchase Commitment

As part of the deal, India has agreed to purchase goods worth over $500 billion (around ₹46 lakh crore) from the US under the ‘Buy American’ policy.

These purchases will include:

• Energy products

• Technology

• Agricultural commodities

• Coal

• Other industrial goods

Trump described the agreement as a major boost for the US economy.

PM Modi Welcomes Tariff Cut on ‘Made in India’ Products

After the announcement, Prime Minister Narendra Modi said that reducing tariffs on ‘Made in India’ products to 18% is a major relief for India’s 1.4 billion people.

He thanked President Trump for the decision, calling it beneficial for India’s economy and exporters.

What Trump Said About PM Modi

In his social media post, Donald Trump praised Prime Minister Modi, calling him a good friend. He wrote that PM Modi is a strong and respected leader, adding that both leaders believe in delivering results rather than just making promises.

India–US Tariff Timeline: Key Events

• April 2, 2025: US imposes 10% baseline tariff on India

• April 5, 2025: 26% tariff announced

• April 9, 2025: Tariff suspended for 90 days

• July 31, 2025: 25% reciprocal tariff announced

• August 6, 2025: Additional 25% tariff over Russian oil purchases

• August 27, 2025: Total tariff reaches 50%

• February 2, 2026: Tariff reduced to 18%

India Joins Low-Tariff Countries Category

US Ambassador to India Sergio Gor said the deal is almost final, with only a few technical documents left to be signed. He described the agreement as the result of the long-standing friendship between PM Modi and President Trump.

With this move, India has now joined the group of countries that face some of the lowest US tariffs globally.

India’s Tariff Position Compared to Other Countries

• Russia: 50%

• Brazil: 50%

• China: 34%

• South Africa: 30%

• Bangladesh: 20%

• Pakistan: 19%

• India: 18%

• European Union: 15%

• Japan: 15%