The United States President Donald Trump has announced what he called a “trade deal” with India to reduce market barriers between the two countries, whose combined gross domestic product is about $33 trillion. Trump said on Monday, February 2, that the U.S. would cut tariffs on Indian goods from a combined 50% to 18% after India agreed to stop buying Russian oil, a key dispute in bilateral talks.
Trump said the agreement was reached during a telephone call with Indian Prime Minister Narendra Modi. The White House officials said the move includes the removal of an additional 25% tariff imposed last year on Indian goods in response to India’s purchase of Russian oil. Trump also claimed India would eliminate tariffs and non-tariff barriers on U.S. goods and buy more than $500 billion worth of U.S. products, including energy, technology, agricultural goods and coal.
India has not publicly confirmed several of these claims. In a post on X, Modi confirmed only that Indian products would now face a reduced U.S. tariff of 18% and thanked Trump for the announcement. He did not mention a trade deal, Russian oil purchases, or commitments to large-scale U.S. imports. India’s commerce minister, Piyush Goyal, said on Tuesday, February 3, that a deal would be signed “shortly” and that a joint statement would be released once details were finalized.
The announcement follows a year of heightened trade tensions under Trump’s global trade war, during which India was among the hardest hit. The U.S. is India’s largest trading partner, with bilateral trade worth $129.2 billion last year. India exported nearly $87 billion in goods to the U.S. in 2024, while the U.S. exports to India were about $41 billion.
At an 18% tariff rate, India would face lower U.S. tariffs than several regional exporters, including Vietnam at 20% and China at 34%.
However, countries such as Vietnam and Bangladesh benefit from the U.S. Generalized System of Preferences (GSP), which allows duty-free access for selected goods, a status India lost in 2019. Details of the India-U.S. agreement, including whether a formal free trade agreement has been concluded, remain undisclosed.
Asia Pacific Newslog 