India tariffs at 18% now: US trade deal sealed after a year of talks
India tariffs at 18% now: US trade deal sealed after a year of talks
M.U.H
03/02/202615
Prime Minister Narendra Modi announced on Monday that Indian goods will face a reduced US tariff of 18% after a phone conversation with President Donald Trump, who said the two sides had concluded a trade deal whereby New Delhi will cut its tariffs to zero and buy American goods, including energy, worth more than $500 billion.
The announcement concludes nearly 12 months of tense negotiations that saw bilateral ties nosedive and India being slapped with some of the highest tariffs in the world.
The first mention of the phone call came from US ambassador Sergio Gor in the form of a social media post at 9.16 pm, followed by a lengthy post by Trump on Truth Social more than an hour later, and then a social media post by the PM almost two hours later.
“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” Modi said on X.
“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” he added.
Modi’s post didn’t have any mention of a trade deal but Union minister Ashwini Vaishnaw confirmed on X that India and the US reached a trade deal, which he called a “win win”.
The new tariff is lower than the 19% rate faced by Pakistan.
Earlier on Truth Social, Trump said that it was “an honour” to speak to Modi, calling him one of his “greatest friends”. He further said that both leaders “are two people that get things done” and that India agreed to stop buying Russian oil, and purchase $500 billion worth of US energy and tech.
“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,” the US President said.
Trump added that India had “agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela”, and would also move to reduce tariffs and non tariff barriers against the US to zero. Trump said that this would “help end the war in Ukraine”.
“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,” the US President said.
“The Prime Minister also committed to “BUY AMERICAN,” at a much higher level, in addition to over $500 BILLION DOLLARS of US Energy, Technology, Agricultural, Coal, and many other products,” Trump further added.
Modi also praised Trump. “President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights,” he said.
The breakthrough in talks comes almost exactly a year after New Delhi and Washington launched trade talks during Modi’s visit to America last February. Over the last 12 months, the two sides have held six formal rounds of talks besides numerous informal consultations in an attempt to get the trade deal over the line. Recently, a delegation led by Deputy US Trade Representative Rick Switzer travelled to India in December 2025.
Trump’s long post on Truth Social only mentioned reciprocal tariffs but a White House official confirmed to HT that the other 25% tariff will be dropped “as part of India’s agreement to cease Russian oil purchases”. “Final tariff will be 18%,” the official said.
Speaking to HT, Under Secretary of State Jacob Helberg welcomed the trade agreement.
“We’re excited that the successful conclusion of the deal actually creates and adds a lot of positive momentum to actually deepening our industrial collaboration,” Helberg told HT ahead of a crucial critical minerals ministerial dialogue in Washington DC, which external affairs minister S Jaishankar is expected to attend.
“We think that now that the trade deal is finalised, it will actually help create a lot of momentum and free up a lot of political oxygen that can be channeled towards specific, tactical projects,” Helberg added.
On X, Vaishnaw called US and India “natural allies”. “US and India have complementary strengths. Both countries can co-create technologies and co-develop solutions that will benefit the world. Trade deal between US and India will lead to brighter future for both countries. India-US Trade deal is a win-win deal. Citizens and industries of both countries will benefit greatly from this deal,” he added.
US Ambassador to India Sergio Gor earlier confirmed that Trump had spoken to Modi.
“As I have said many times, President Trump genuinely considers Prime Minister Modi a great friend! Thrilled by the news of the trade deal this evening. The relationship between the United States and India has LIMITLESS POTENTIAL!” he posted on X.
No details of the trade deal were immediately available but the announcement came days after India and the European Union sealed a trade pact, dubbed by both leaderships as the “mother of all deals”.
Earlier in the evening, Trump posted a photo of the India Gate. “India’s beautiful Triumphal Arch. Ours will be the greatest of them all!” he said. In another post, Trump shared a picture of Modi and him on a magazine cover for India Today.
Before Monday, Trump and Modi last spoke on phone in October 2025. The two leaders had agreed at a meeting in February last year to finalise the first tranche of a bilateral trade agreement by the autumn. Though the two sides held several rounds of negotiations, forward movement on the trade deal stalled after Trump imposed 50% tariffs on Indian goods, including the 25% punitive levy.
While Russia had become one of India’s largest energy suppliers after New Delhi began buying discounted Russian crude when the West imposed sanctions on Moscow over the invasion of Ukraine, these purchases had begun going down in recent months. The Indian side has maintained that its energy purchases will be decided according to market conditions and the need to ensure energy security.
Bilateral relations were also hit by other issues, including Trump’s repeated claims of brokering a ceasefire to end the brief but intense conflict between India and Pakistan last May, the tightening of immigration regulations by the US and constant criticism by senior American officials of India’s energy and defence ties with Russia.
