Digital Team
US President Donald Trump announces immediate tariff relief for Indian exports after talks with Prime Minister Narendra Modi, signalling a reset in strained India-US trade ties.
US President Donald Trump on February 2, 2026, announces a sharp cut in reciprocal tariffs on Indian goods, lowering duties from 25% to 18% with immediate effect. The decision follows a phone call with Indian Prime Minister Narendra Modi, marking a significant thaw in India-US trade relations after months of tension over tariffs, market access, and India’s energy ties with Russia.
India-US Trade Relations See Major Reset with Tariff Cut
The tariff rollback is the most concrete signal yet of a reset in India-US trade relations, which had come under strain after Washington imposed steep duties—up to 50% on select Indian imports—citing trade imbalances and geopolitical concerns linked to Russian oil purchases.
Trump announces the decision on his social media platform Truth Social, calling it a gesture of “friendship and respect” for Modi. He says the move follows a direct request from the Indian Prime Minister during their conversation earlier in the day.
According to Trump, the agreement reflects a broader understanding aimed at deepening bilateral economic ties while addressing long-standing US concerns on tariffs and non-tariff barriers imposed by India.
What the Tariff Reduction Means for Indian Exports
The immediate reduction to 18% is expected to provide relief to Indian exporters across sectors such as engineering goods, textiles, pharmaceuticals, auto components, and processed food products—segments that had faced margin pressures due to elevated US duties.
Trade analysts say the move could improve price competitiveness of “Made in India” products in the US market, especially at a time when global demand remains uneven.
“Any tariff moderation helps exporters regain lost ground,” a senior trade official says, noting that the US remains one of India’s largest export destinations.
Trump Claims Zero Tariffs on US Goods, $500 Billion Buy American Push
In his announcement, Trump goes further, claiming India has agreed to eliminate tariffs and non-tariff barriers on US products entirely. He also states that New Delhi has committed to “BUY AMERICAN” purchases worth over $500 billion across energy, technology, agriculture, coal, and other sectors.
While Indian authorities have not publicly confirmed the zero-tariff claim in detail, officials indicate that negotiations on market access and phased reductions are ongoing under existing bilateral trade frameworks.
The US President also links the trade understanding to India gradually shifting away from Russian oil imports—an issue that had drawn repeated criticism from Washington amid the Ukraine conflict.
India’s Response: ‘Made in India’ Gets a Boost
Prime Minister Modi acknowledges the tariff cut in a social media post, thanking Trump for what he describes as a positive step for Indian industry and consumers.
He says the decision will benefit “Made in India products” and strengthen economic opportunities for India’s population of 1.4 billion. The emphasis, officials say, remains on protecting domestic manufacturing while expanding export access.
US envoy Sergio Gor confirms that the Modi-Trump call took place as part of ongoing trade and strategic discussions between the two countries.
Why India-US Trade Ties Had Soured
Over the past year, India-US trade relations had witnessed growing friction due to:
- High US tariffs on Indian exports
- American concerns over India’s trade barriers
- Criticism of India’s continued Russian oil imports
- Broader geopolitical differences linked to the Ukraine war
The tariff reduction does not remove all additional duties but eases immediate pressure on exporters while keeping negotiations alive on unresolved issues.
Key Commitments at a Glance
| Aspect | US Commitment | India Commitment |
| Tariffs | Reduce reciprocal tariff to 18% on Indian goods | Cut tariffs and non-tariff barriers on US goods (as claimed by US) |
| Purchases | — | $500 billion+ in US energy, tech, agri, coal |
| Energy | Encourage diversification | Gradual shift away from Russian oil |
Strategic and Economic Implications
Economists note that the move has implications beyond trade numbers. It reinforces India’s strategic importance to the US amid shifting global supply chains and efforts to counterbalance China.
At the same time, India gains negotiating space to protect domestic interests while expanding access to its largest export markets.
Whether the ambitious purchase commitments translate into binding agreements will depend on follow-up negotiations and domestic approvals in both countries.
What Happens Next in India-US Trade Talks
The decision by Donald Trump to cut tariffs on Indian goods to 18% marks a pivotal moment in India-US trade relations. While immediate relief for exporters is clear, the durability of the agreement will hinge on how both sides operationalise commitments on market access, energy sourcing, and long-term trade rules.
With talks continuing, businesses on both sides of the Atlantic will watch closely to see whether this thaw evolves into a broader, more stable trade partnership.
FAQs
Q: Why did the US cut tariffs on Indian goods?
A: The cut followed talks between Donald Trump and Narendra Modi aimed at easing trade tensions and improving bilateral relations.
Q: When does the new 18% tariff rate take effect?
A: The revised tariff is effective immediately from February 2, 2026.
Q: Does India really offer zero tariffs on US goods?
A: The US claims so, but Indian officials say negotiations on phased reductions are still ongoing.
Q: How will Indian exporters benefit?
A: Lower tariffs improve competitiveness of Indian goods in the US market, especially in manufacturing and textiles.
Q: Is this linked to India’s Russian oil imports?
A: Yes, the US has linked trade concessions to India gradually reducing reliance on Russian oil.
References
- https://www.aa.com.tr/en/economy/trump-announces-new-us-india-trade-deal-cutting-reciprocal-tariffs-to-18-/3818172
- CNN: https://www.cnn.com/2026/02/02/business/india-russian-oil-trump-tariffs
- CNBC: https://www.cnbc.com/2026/02/02/trump-india-trade-deal-tariffs.html
- https://www.nagpurtoday.in/
