US, India agree on trade deal, as Trump lowers tariffs to 18 per cent

WASHINGTON: US President Donald Trump on Monday announced that a trade deal has been agreed with India following discussions with Indian Prime Minister Narendra Modi.

Under the agreement, the United States will reduce its reciprocal tariff on Indian goods from 25 per cent to 18 per cent.

 Trump also said India would halt purchases of Russian oil and instead boost energy imports from the US, potentially including supplies from Venezuela.

India has additionally committed to buying more than $500 billion worth of US products across sectors such as energy, technology, agriculture and other goods, marking a significant shift in bilateral economic relations.

The announcement follows a period of strained ties after Washington previously imposed steep tariffs on Indian exports, partly to pressure New Delhi over discounted Russian crude purchases.

Earlier tensions had escalated when the United States doubled tariffs on many Indian goods to as much as 50 per cent, citing concerns that India’s oil trade with Russia indirectly supported Moscow’s war in Ukraine.

Separately, reports indicated India would begin sourcing oil from Venezuela rather than Iran, though officials had not confirmed contract details at the time.

However, before the latest deal, Indian exporters were bracing for a sharp drop in US orders after trade talks collapsed and Washington confirmed new tariffs would take effect, pushing total duties to as high as 50 per cent.

An additional 25 per cent duty, imposed in retaliation for India’s increased buying of Russian oil, left the government with little hope of immediate relief, according to a commerce ministry official, who added that affected exporters would receive financial support and be encouraged to diversify into markets such as China, Latin America and the Middle East.

The tariffs were scheduled to apply from 12:01 am EDT on Wednesday, with exceptions for shipments already in transit, humanitarian aid and goods covered under reciprocal trade programmes.

The Indian currency fell to a three-week closing low of 87.68 against the dollar, while benchmark equity indexes dropped about 1 per cent, marking their worst sessions in three months.

The tariff move followed five rounds of unsuccessful negotiations, with officials on both sides blaming political misjudgment and missed signals for the breakdown in talks between the world’s largest and fifth-largest economies, whose two-way trade exceeds $190 billion.

US officials, including trade adviser Peter Navarro and Treasury Secretary Scott Bessent, have accused India of indirectly funding Russia’s war in Ukraine by expanding purchases of Russian oil, which is a key factor behind the trade dispute.