The US will cut tariffs on India to 18% in new trade deal

The US has agreed to reduce tariffs to 18% on India, which in turn will stop buying Russian oil, President Trump said on Monday, in a deal aimed at easing trade tensions between the two countries.

“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%,” Trump said in a social media post following a call with Indian Prime Minister Narendra Modi.

The US was also rescinding a punitive, 25% duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25% “reciprocal” tariff rate. U.S.-listed shares of major Indian companies rallied on the news.

T consulting firm Infosys was up 3.53% in afternoon trading, consultancy Wipro rose 7% , HDFC Bank gained 3.4% and the iShares MSCI India exchange-traded fund rallied 3.3%.

Modi also committed India to “BUY AMERICAN at a much higher level,” in addition to buying more than $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 levels last year, India had some of the world’s highest tariffs, with a simple applied rate of 15.6% and an effective applied tariff of 8.2%, according to World Trade Organization data.

The deal brings India “broadly in line with its Asian peers on tariff rates,” of 15-19%, said Madhavi Arora, economist at Emkay Global, adding that it would eliminate a disproportionate drag on India’s exports and its rupee currency.

“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%,” Modi said in a social media post on X. “Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”