US President Donald Trump on Monday announced a trade deal with India that slashes US tariffs on Indian goods to 18 percent from 50 percent in exchange for India halting Russian oil purchases and lowering trade barriers.
Trump announced the deal on social media following a call with Indian Prime Minister Narendra Modi, adding that India would buy oil from the US and potentially Venezuela.
A White House official said that the US was rescinding a punitive 25 percent duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25 percent “reciprocal” tariff rate.
Photo: EPA
Trump’s announcement added to positive sentiment over semiconductor makers and artificial intelligence, lifting major indices into positive territory on the day.
Modi also committed India to “BUY AMERICAN at a much higher level,” in addition to buying more than US$500 billion worth of US energy, including coal, along with technology, agricultural and other products, Trump added.
“They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO,” Trump said of India.
Until Trump returned to office and raised US tariff rates to double-digit percentage levels last year, India had some of the world’s highest tariffs, with a simple applied rate of 15.6 percent and an effective applied tariff of 8.2 percent, WTO data showed.
Trump’s Truth Social message provided few details, including on the start date for the lower tariff rates, the deadline for India to end Russian oil purchases, trade barrier reductions and which US products India had committed to purchasing.
As of late Monday afternoon, the White House had not issued a presidential proclamation nor a Federal Register notice required to make the changes official.
Previous trade deals with other major Asian trading partners including Japan and South Korea have included commitments to invest hundreds of billions of dollars into US industries, but the India announcement did not mention any specific investments.
The deal brings India “broadly in line with its Asian peers on tariff rates” of 15 to 19 percent, Emkay Global economist Madhavi Arora said, adding that it would eliminate a disproportionate drag on India’s exports and the rupee.
Indian markets had been battered since the tariffs were levied by Washington, making it the worst-performing market among emerging nations last year, with record outflows of foreign investors.
US business groups reacted with caution and criticism. The US Chamber of Commerce, which has long advocated a market-opening trade deal with India, called Trump’s announcement progress toward that goal.
“We are optimistic that this is the first step toward a comprehensive trade agreement that will unlock even more private sector collaboration, and we look forward to reviewing the details of the deal,” chamber CEO Suzanne Clark said in a statement.
A coalition of more than 800 small businesses called “We Pay the Tariffs” urged Americans not to celebrate the deal, which it called a “600 percent tax increase on American businesses compared to 2024.”
The group said that US tariffs on Indian imports were about 2 to 3 percent at that time, but would now be 18 percent and could go higher if India does not fully wean itself off Russian oil.
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