Trump’s Trade Victory: India Tariffs Down, US Exports Boosted

Washington, D.C. – February 3, 2026 – President Donald Trump announced a fresh trade deal with India late Monday, following a direct phone call with Prime Minister Narendra Modi. The agreement, which takes effect immediately, reduces the U.S. reciprocal tariff on Indian goods from 25% to 18% and eliminates an additional 25% punitive duty previously imposed due to India’s continued purchases of Russian crude amid the Ukraine conflict.

In a post on Truth Social, Trump described the pact as a product of “friendship and respect” for Modi, stating: “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%.” He further claimed that Modi committed to halting all Russian oil imports, shifting sourcing to American suppliers (and potentially Venezuela), reducing India’s tariffs and non-tariff barriers on U.S. products to zero, and significantly increasing “Buy American” purchases—including over $500 billion in U.S. energy, technology, agriculture, coal, and other sectors.

Prime Minister Modi confirmed the positive outcome on social media, expressing gratitude for the tariff relief on “Made in India” products but stopping short of detailing the oil shift or massive purchase figures highlighted by Trump. “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 posted.

The deal resolves a period of heightened trade friction that saw effective U.S. tariffs on some Indian exports reach as high as 50%, impacting sectors like textiles, pharmaceuticals, and seafood. U.S. officials and business groups, including the U.S. Chamber of Commerce, hailed the progress as a step toward stronger economic ties and supply-chain resilience between the world’s two largest democracies.

Analysts note that while the tariff cut provides immediate relief for Indian exporters—and could benefit American consumers through lower import costs—the full scope of India’s commitments on energy diversification and large-scale U.S. purchases remains under scrutiny. Experts from think tanks like the Atlantic Council have questioned the feasibility of an abrupt end to Russian oil imports, given India’s energy security needs, though recent trends show gradual diversification.

Markets responded favorably, with expectations of upward movement in U.S.-related stocks and positive spillover for bilateral investment. For American businesses and farmers, the agreement opens doors to expanded market access in one of the fastest-growing economies.

This initial pact—often described as a “mini” or tariff-focused deal—could lay the groundwork for deeper negotiations on a comprehensive Bilateral Trade Agreement (BTA). It underscores the Trump administration’s “America First” approach in using tariffs as leverage to achieve strategic wins on energy, trade balances, and geopolitical alignments.

As more details emerge from official channels, the U.S.-India partnership appears poised for renewed momentum.

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