India–US Trade Deal Explained: $500 Billion Deal, Ban on Russian Oil, 18% Tariffs
US President Donald Trump on Monday unveiled a new trade agreement with India, promising reduced reciprocal tariffs and broader market access. He also asserted that New Delhi would stop buying Russian oil and significantly boost imports from the United States. India has confirmed the tariff cuts, with Prime Minister Narendra Modi welcoming the development following a phone conversation between the two leaders.
Following a phone conversation on Monday, Trump and PM Modi announced the India–US trade deal. This development follows almost a year of challenging negotiations that had put a strain on bilateral relations and resulted in India encountering some of the highest US tariffs worldwide.
Prime Minister Narendra Modi announced that Indian products will now encounter a decreased US tariff of 18% after his phone discussion with President Trump. This new rate supersedes the previous 25% reciprocal tariff and is less than the 19% rate imposed on Pakistan.
PM Modi also praised Trump's leadership, saying it was “vital for global peace, stability, and prosperity,” and said he looked forward to working closely with him to take the partnership to “unprecedented heights.”
Although Modi's post affirmed the tariff reduction, it did not specifically reference a trade agreement or obligations concerning the purchase of Russian oil or the elimination of tariffs on American products.
The first indication of the call came from US Ambassador to India Sergio Gor in a late-evening social media post, followed by statements from Donald Trump and later Prime Minister Narendra Modi. Gor said Trump views Modi as a close friend and hailed the trade deal as a major boost with “limitless potential” for bilateral ties.
$500 Billion US Imports, Russian Oil Halt, Lower Tariffs
In a Truth Social post, Trump said the agreement goes beyond tariff cuts, claiming India would reduce tariffs and non-tariff barriers to zero and buy over $500 billion in US goods and energy. Calling it “an honour” to speak with Modi, whom he described as one of his “greatest friends” and a “powerful and respected leader,” Trump said both “are two people that get things done.” He added that India would stop buying Russian oil and increase US energy purchases.
“Out of friendship and respect for Prime Minister Modi… we agreed to a Trade Deal… lowering [the reciprocal tariff] from 25% to 18%,” Trump wrote, adding that India would “BUY AMERICAN” at a much higher level. A White House official said the additional 25% punitive tariff linked to Russian oil would be dropped, bringing the final tariff to 18%.
India–US trade deal: What we know so far
The US has cut its reciprocal tariff on Indian goods from 25% to 18%.
Prime Minister Narendra Modi has publicly confirmed the revised 18% tariff rate.
Union Minister Ashwini Vaishnaw said the trade agreement has been finalised, describing it as a win-win outcome.
Trump said the trade deal takes effect immediately.
Trump claimed India will eliminate tariffs and non-tariff barriers on US goods.
He also claimed India will purchase more than $500 billion worth of US goods and energy.
Trump further asserted that India will stop buying Russian oil and redirect energy imports to the US and possibly Venezuela.
A White House official said the punitive tariff linked to Russian oil imports would be withdrawn under the deal.
Statements from PM Modi, Ashwini Vaishnaw and Piyush Goyal so far
confirm tariff relief but do not verify oil or purchase commitments.
