US Slashes Tariffs on Indian Imports After Modi Agrees to Halt Russian Oil Purchases
WASHINGTON: The United States has announced a major reduction in import tariffs on Indian goods, lowering the rate to 18%, following an agreement reached between President Donald Trump and Indian Prime Minister Narendra Modi.
The move eliminates previously imposed tariffs of up to 50%, which had weighed heavily on Indian markets and strained bilateral trade relations. President Trump said the decision was made out of “friendship and respect” for Modi and took immediate effect.
Trump described the tariff cut as part of a broader effort to unlock new avenues of economic cooperation between the world’s two largest democracies.
In return, India has agreed to stop purchasing oil from Russia and instead increase energy imports from the United States, with potential supplies also expected from Venezuela. Washington views the move as a strategic step to reduce India’s reliance on Russian oil and to reinforce international pressure on Moscow.
Prime Minister Modi welcomed the tariff reduction, calling it a positive development that would directly benefit Indian manufacturers. He reaffirmed India’s commitment to strengthening bilateral economic ties through a more open and cooperative trade framework.
India is also expected to further reduce both tariff and non-tariff barriers on US products, possibly to zero levels, in line with ongoing negotiations. However, the full details of the agreement have yet to be finalized.
Beyond tariff adjustments, New Delhi is projected to significantly increase purchases of US goods across multiple sectors, including energy, agriculture, technology, coal, and other commodities, signaling a deepening of trade relations.
The announcement follows months of difficult negotiations between Washington and New Delhi, particularly over India’s continued purchases of discounted Russian oil, which had become a key source of diplomatic tension.
Previously high tariffs had taken a visible toll on India’s financial markets, contributing to stock market declines and substantial foreign investor outflows. The latest decision is widely seen as a boost to market confidence.
Following the announcement, shares of Indian companies listed in the United States rose sharply, especially in the technology and banking sectors, reflecting strong investor optimism.
However, questions remain over a separate additional 25% tariff previously linked to Russian oil purchases, with US authorities yet to clarify whether it will be fully withdrawn.
India had earlier capitalized on discounted Russian oil prices, but analysts note that such purchases have been gradually declining since the start of the year amid shifting global market dynamics.
Experts believe the reduction to an 18% tariff rate will enhance the competitiveness of Indian products in the US market and signal a mutual willingness to ease trade tensions.
From a geopolitical perspective, the move is also viewed as an effort to reinforce strategic cooperation between the United States and India, particularly in areas of global stability and economic growth.
Although a comprehensive trade agreement has yet to be formally announced, Trump’s decision is widely regarded as a significant step toward a new chapter in US–India trade relations.