The United States and India have agreed to a trade deal that cuts US tariffs on Indian goods from 50 per cent to 18 per cent, easing bilateral tensions and giving India a stronger tariff advantage over key regional competitors
US President Donald Trump and Indian
Prime Minister Narendra Modi have agreed to a trade deal that significantly cuts US tariffs on Indian goods, a move aimed at easing longstanding trade tensions between the two largest democracies. Under the
agreement, the levy that stood at 50 per cent has been reduced to 18 per cent, with Washington withdrawing the extra penalty previously linked to India’s purchase of Russian crude oil and leaving only the revised reciprocal tariff in place.
The original 50 per cent tariff included a 25 per cent reciprocal tariff and an additional 25 per cent import duty imposed because of India’s Russian oil purchases. With the new deal, this additional penalty has been dropped and the overall rate lowered to 18 per cent.
A White House official told Reuters that the United States had withdrawn the punitive duty linked to Russian oil imports, leaving only the revised reciprocal tariff.
India gains tariff competitive edge
Under the new tariff structure, India now has lower duty rates compared with several regional competitors. Countries such as Indonesia, Bangladesh, and Vietnam face higher tariff rates, and India’s rate is significantly lower than those for China and Pakistan.
A comparison of US tariff rates on imports from other countries shows:
Higher tariffs:
Lower tariffs:
Comparable Southeast Asian rates:
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Bangladesh: 20 per cent
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Vietnam: 20 per cent
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Malaysia: 19 per cent
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Cambodia: 19 per cent
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Thailand: 19 per cent
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Pakistan: 19 per cent
These comparisons underline how India’s revised rate places it closer to major US allies and trading partners.
Reactions from leaders
Trump announced the agreement in a post on his social media platform, Truth Social. “It was an Honor to speak with Prime Minister Modi… We spoke about many things, including Trade, and ending the War with Russia and Ukraine,” he wrote.
Trump added that PM Modi had agreed to reduce purchase of Russian oil and increase purchases from the United States and “potentially, Venezuela”, saying this would help “END THE WAR in Ukraine”. “Our amazing relationship with India will be even stronger going forward,” he said.
Prime Minister Narendra Modi welcomed the development, calling it a boost for “Made in India” products. In a post on X, he wrote, “Delighted that Made in India products will now have a reduced tariff of 18 per cent. Big thanks to President Trump on behalf of the 1.4 billion people of India.”
The move comes amid a backdrop of elevated US tariffs on Indian goods last year, during which total duties rose to 50 per cent after Washington added punitive measures related to India’s crude oil imports from Russia.
Negotiations between the two countries have been ongoing as both sought to address trade frictions and align on broader economic cooperation.
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