U.S., India seal trade deal cutting tariffs on Indian goods to 18%

The United States and India have reached a trade agreement that will reduce U.S. tariffs on Indian goods to 18% from sharply higher levels, U.S. President Donald Trump said on Monday following a phone call with Indian Prime Minister Narendra Modi.

Trump said the deal was reached “out of friendship and respect” for Modi and would take effect immediately. Under the agreement, India has committed to lowering trade barriers, ending its purchases of Russian oil and increasing imports of U.S. energy, technology and agricultural products.

A White House official told Reuters that Washington would rescind a separate 25% punitive duty imposed on all Indian imports over New Delhi’s continued purchases of Russian oil, which had been stacked on top of a 25% reciprocal tariff.

Trump added that India had committed to buying more than $500 billion worth of U.S. goods, including energy and technology products.

Modi welcomed the announcement in a post on social media platform X, saying “Made in India products will now have a reduced tariff of 18%,” and thanked Trump on behalf of India’s 1.4 billion people. He said closer cooperation between the two countries would unlock new opportunities.

U.S.-listed shares of major Indian companies rose on the news. Infosys gained 3.5%, Wipro climbed about 7%, HDFC Bank rose 3.4%, while the iShares MSCI India exchange-traded fund advanced 3.3%.

The agreement follows months of strained trade relations between the two countries. Last August, the U.S. doubled tariffs on Indian imports to 50% to pressure New Delhi to curb Russian oil purchases, warning earlier this month that duties could rise further.

India, the world’s third-largest oil importer, relies on imports for around 90% of its oil needs. While discounted Russian oil helped reduce costs after Moscow’s invasion of Ukraine in 2022, India has recently begun scaling back those purchases, according to Reuters data.