US-India Trade Deal Announced
On February 2, 2026, US President Donald Trump announced a trade deal with India, stating that tariffs on Indian goods would be cut to 18%. Previously, Trump had levied a 25% reciprocal tariff, in addition to another 25% for India's purchase of Russian oil.
Trump's Claims Regarding Russian Oil
Trump stated that Prime Minister Narendra Modi had promised to cease buying Russian oil due to the war in Ukraine. According to Trump, India would increase its purchases from the United States and potentially Venezuela. Trump said this would help end the war in Ukraine.
However, while Modi acknowledged the “wonderful” news regarding tariffs and thanked Trump, he did not comment on the claim that India would halt Russian oil purchases.
Details of the Trade Deal
With the new agreement, the additional 25% tariff on India’s Russian oil imports has been removed. The US will lower the reciprocal duty imposed on India during his waves of global “Liberation Day” tariffs last year from 25% to 18%.
Though details are still emerging, Trump claimed India would also reduce its tariffs and non-tariff barriers against the United States to zero. He also claimed Modi pledged to buy over $500 billion worth of US energy, technology, agricultural, and other products.
India's Perspective
Modi stated that “Made in India” products would now attract a reduced tariff of 18% in the U.S.. He also thanked Trump and said that cooperation between the two countries would benefit their people and unlock opportunities.
Impact and Analysis
The agreement comes shortly after India signed a trade deal with the European Union. With the new tariff structure, India now has a clear advantage over competing export economies in the region, with lower tariff rates compared to Indonesia, Bangladesh and Vietnam, and significantly lower tariffs compared to China and Pakistan.
The Rupee is expected to increase due to the trade deal, with expectations that foreign investors will return to Indian assets.
Conclusion
President Trump announced a trade deal with India, lowering tariffs on Indian goods to 18%. He claimed this was contingent on India ceasing Russian oil purchases, a claim not directly confirmed by Prime Minister Modi. The deal removes an additional tariff on India's Russian oil imports, potentially giving India a tariff advantage over other nations.
