India–US Seal Landmark Tariff-Cut Deal, Set Stage for Formal Trade Pact

US President Donald Trump on Monday announced that Washington and New Delhi have reached a trade agreement to lower reciprocal tariffs, in what is being billed as a major reset in bilateral trade ties. Following a phone call with Prime Minister Narendra Modi, Trump said the US will immediately cut tariffs on Indian goods from 25 per cent to 18 per cent, while claiming that India has agreed to reduce its tariffs and non-tariff barriers on US products to “zero.”

In a post on Truth Social, Trump described Modi as a close friend and a respected leader, adding that India had also agreed to stop buying Russian oil and ramp up energy purchases from the US. He said New Delhi would significantly ease trade barriers for American goods, signalling a broader opening of India’s market to US exports. A White House official later told ANI that the US will also withdraw an additional 25 per cent tariff imposed over India’s Russian oil purchases, but stressed that India must “cease, not just reduce” its intake of Russian crude.

​Responding on X, Prime Minister Modi said he was delighted with his discussion with “dear friend President Trump” and welcomed the reduction in tariffs on “Made in India” products. He framed the understanding as a step that will support Indian manufacturers and exporters, while deepening the strategic partnership between the two democracies.

External Affairs Minister S. Jaishankar also hailed the deal, saying it will boost job creation, spur economic growth, promote innovation and strengthen the government’s flagship Make in India initiative. “This will create more jobs, spur growth and promote innovation in both economies. It will strengthen ‘Make in India’ endeavours and encourage trusted technology ties,” he wrote on X, underlining the agreement’s role in high-technology and value-added trade.

​Commerce and Industry Minister Piyush Goyal said the trade pact unlocks “unprecedented opportunities” for farmers, MSMEs, entrepreneurs and skilled workers in both countries, reflecting the potential of two large democracies working together for shared prosperity. Echoing that sentiment, Railway and I&B Minister Ashwini Vaishnaw called it a “win-win deal” that would benefit citizens and industries on both sides.

Officials indicated that the political understanding on tariff cuts will now move towards a formal, legally vetted trade pact, expected to be signed in the near future. Policy watchers say the shift to an 18 per cent US tariff on Indian goods could materially improve export competitiveness in key sectors, while India’s reciprocal opening for US products marks a significant recalibration of its trade posture towards Washington.