Wednesday, 04 February, 2026
US President Donald Trump has announced a major bilateral trade deal with Indian Prime Minister Narendra Modi, under which the United States will reduce tariffs on Indian goods to 18% from 25%, in what Washington described as a breakthrough in economic relations between the two nations.
In a post on his social media platform Truth Social on 2 February 2026, Trump said the agreement was reached after a phone call with Modi, in which both leaders discussed trade and geopolitical issues, including the ongoing war in Ukraine.
Under the deal, the United States will cut reciprocal tariffs on Indian exports to 18%, down from the punitive levels imposed during 2025, and drop an additional 25% tariff that had been linked to India’s previous purchase of Russian oil.
Trump’s announcement emphasised the personal relationship between the two leaders. He said India has agreed to reduce its trade barriers to zero and pledged to buy more American goods, including energy, technology, agricultural products and coal. Trump also claimed India would stop purchasing Russian oil and increase its imports from the United States and potentially Venezuela, a move framed as part of broader efforts to support stability amid the Russia–Ukraine conflict.
According to the US announcement, New Delhi would also eliminate tariffs and non‑tariff barriers on American products, although detailed terms of these commitments have not yet been published by either side.
Prime Minister Narendra Modi publicly welcomed the agreement, thanking Trump “on behalf of the 1.4 billion people of India” and calling the tariff reduction “a wonderful announcement” that will benefit both economies.
The deal marks a significant shift in a trade relationship that came under strain last year when Washington imposed steep tariffs—at times reaching 50% on Indian imports—citing concerns over trade imbalances and India’s ties with Russia. The new agreement effectively reverses much of that punitive tariff escalation, easing pressure on Indian exports and exporters.
The tariff reduction comes amid broader shifts in India’s global trade posture. Last week, New Delhi sealed a free trade agreement with the European Union, a pact described as a landmark deal aimed at reducing tariffs on most goods and boosting trade with the EU.
Markets reacted positively to the trade announcement, with Asian equities and US‑listed Indian stocks rallying on expectations of improved bilateral economic cooperation. Analysts say the tariff cut should bolster Indian manufactured goods’ competitiveness in the US market and strengthen investment sentiment between the two largest democracies.
Yet some questions remain unresolved. While Trump touted commitments on oil purchases and goods procurement worth potentially hundreds of billions of dollars, details of these figures and India’s formal confirmation are still awaited from official Delhi sources.
The agreement appears aimed at deepening strategic economic ties amid global competition, while addressing previous trade frictions. Both governments have indicated that technical and legal steps remain before the deal is fully implemented, but the announcement signals a reset in US–India trade relations at a critical moment for global diplomacy and trade policy.
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US President Donald Trump has announced a major bilateral trade deal with Indian Prime Minister Narendra Modi, under which the United States will reduce tariffs on Indian goods to 18% from 25%, in what Washington described as a breakthrough in economic relations between the two nations.
In a post on his social media platform Truth Social on 2 February 2026, Trump said the agreement was reached after a phone call with Modi, in which both leaders discussed trade and geopolitical issues, including the ongoing war in Ukraine.
Under the deal, the United States will cut reciprocal tariffs on Indian exports to 18%, down from the punitive levels imposed during 2025, and drop an additional 25% tariff that had been linked to India’s previous purchase of Russian oil.
Trump’s announcement emphasised the personal relationship between the two leaders. He said India has agreed to reduce its trade barriers to zero and pledged to buy more American goods, including energy, technology, agricultural products and coal. Trump also claimed India would stop purchasing Russian oil and increase its imports from the United States and potentially Venezuela, a move framed as part of broader efforts to support stability amid the Russia–Ukraine conflict.
According to the US announcement, New Delhi would also eliminate tariffs and non‑tariff barriers on American products, although detailed terms of these commitments have not yet been published by either side.
Prime Minister Narendra Modi publicly welcomed the agreement, thanking Trump “on behalf of the 1.4 billion people of India” and calling the tariff reduction “a wonderful announcement” that will benefit both economies.
The deal marks a significant shift in a trade relationship that came under strain last year when Washington imposed steep tariffs—at times reaching 50% on Indian imports—citing concerns over trade imbalances and India’s ties with Russia. The new agreement effectively reverses much of that punitive tariff escalation, easing pressure on Indian exports and exporters.
The tariff reduction comes amid broader shifts in India’s global trade posture. Last week, New Delhi sealed a free trade agreement with the European Union, a pact described as a landmark deal aimed at reducing tariffs on most goods and boosting trade with the EU.
Markets reacted positively to the trade announcement, with Asian equities and US‑listed Indian stocks rallying on expectations of improved bilateral economic cooperation. Analysts say the tariff cut should bolster Indian manufactured goods’ competitiveness in the US market and strengthen investment sentiment between the two largest democracies.
Yet some questions remain unresolved. While Trump touted commitments on oil purchases and goods procurement worth potentially hundreds of billions of dollars, details of these figures and India’s formal confirmation are still awaited from official Delhi sources.
The agreement appears aimed at deepening strategic economic ties amid global competition, while addressing previous trade frictions. Both governments have indicated that technical and legal steps remain before the deal is fully implemented, but the announcement signals a reset in US–India trade relations at a critical moment for global diplomacy and trade policy.
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