Trump says India, US strike trade deal

Trump and Modi Seal Major Trade Agreement

US President Donald Trump has announced a significant trade deal with India following a phone call with Prime Minister Narendra Modi.

Trump shared the news on his social media platform Truth Social, highlighting a reduction in reciprocal tariffs on Indian exports from the previously imposed 50% level down to 18%.

This move comes after tensions sparked by high tariffs earlier in 2025, including a 25% base rate plus an additional 25% penalty linked to India's purchases of Russian oil.

Modi echoed the sentiment on his own platform, expressing delight that Made in India products would now face a lower 18% tariff, marking a step forward in bilateral economic ties.

The agreement aims to foster greater market access and reciprocal benefits, potentially easing longstanding trade frictions between the two largest democracies.

Key Elements of the Deal and Unresolved Questions

The deal's core feature is the tariff cut, which Trump described as effective immediately out of friendship and respect for Modi.

Trump claimed India would lower its tariffs on US exports to zero and commit to purchasing $500 billion worth of American goods and services over time, spanning energy, agriculture, coal, and technology sectors.

He further asserted that India promised to halt imports of Russian oil—a point tied to the dropped punitive tariff—and possibly shift toward buying oil from the US or even Venezuela.

However, Indian officials have only confirmed the tariff reduction so far, with no public statement on ceasing Russian oil purchases, leaving some aspects in limbo.

The Kremlin has also dismissed Trump's claims, stating they heard nothing from New Delhi on the matter, underscoring potential gaps between announcement and implementation.

This perspective from an international trade expert captures the diplomatic nuance amid the headlines.

The tariff reduction from 25% to 18% matters, but the bigger story is that two major democracies worked through real differences and chose economic alignment in a complex geopolitical environment. Credit is due to President Trump and Prime Minister Modi for providing political direction, and to their teams who tirelessly saw this through.

Negotiations reportedly wrapped up in about nine months, faster than some expected, though details on services, investment, and non-tariff barriers remain thin and subject to further talks.

The 18% rate edges out the 19% deal Pakistan recently secured, giving India a slight competitive advantage in the region.

Broader Implications for Global Trade and Geopolitics

The pact arrives amid India's recent agreement with the European Union to expand market access for European autos and alcohol in exchange for concessions on pharmaceuticals and services.

For the US, it represents a win in Trump's push for reciprocal trade, potentially boosting exports and curbing India's reliance on rivals like Russia and Iran.

Critics note the original high tariffs were punitive and unnecessary, hoping the new rate holds steady without escalation.

Indian Trade Minister Piyush Goyal called it the best deal among neighbors and competitors, signaling domestic optimism.

Yet, past frictions—like Trump's disputed claims of mediating India-Pakistan border issues—had complicated talks, making this breakthrough politically sensitive for Modi's government.

Overall, the deal could strengthen economic alignment between Washington and New Delhi, navigating tensions from the Russia-Ukraine conflict and global energy shifts.

In summary, the India-US trade deal lowers tariffs to 18%, promises massive US purchases, and touches on oil shifts, though full confirmation awaits.

It highlights renewed partnership potential while spotlighting areas needing clarification for lasting impact.