Trump says he will lower tariffs on India after Modi agrees to stop buying Russian oil
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US President Donald Trump on Monday said he has agreed to a trade deal with India that will reduce US tariffs on Indian goods to 18 percent from 50 percent so that India will reduce trade barriers, stop its purchases of Russian oil and buy oil instead from the US and possibly Venezuela.
“Due to the friendship and respect of Prime Minister Modi and, at his request, effective immediately, we agreed to a Trade Agreement between the United States and India, in which the United States will impose a reduced Reciprocal Tariff, reducing it from 25 percent to 18 percent,” Trump said on social media following a call with Indian Prime Minister Narendra Modi.
A White House official told Reuters that the US had also lifted the punitive, 25 percent duty on all imports from India on its Russian oil purchases that had been piled on top of a “proportionate” 25 percent tariff.
Modi also pledged to buy more than $500 billion in energy, technology, agriculture and other products, Trump said.
“It is a pleasure to speak with my dear friend President Trump today. I am happy that Made in India products will now have a reduced tariff of 18 percent,” Modi said in a social media post on X. “I am very grateful to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”
A landmark new trade deal between India and the European Union cuts tariffs on nearly 97 percent of European goods, including cars, and is expected to double EU exports to the South Asian country by 2032. India will benefit from the elimination of tariffs on various goods entering the EU. The agreement also promises easy access for highly skilled professionals from India to work in Europe.
India relies heavily on oil imports, which account for about 90 percent of its needs, and importing cheap Russian oil has helped lower its import costs since Moscow invaded Ukraine in 2022 and the West imposed sanctions on its energy exports.
Recently India has started reducing its imports from Russia. In January, they were around 1.2 million barrels per day, and are expected to drop to 1 million in February and 800,000 in March, according to a Reuters report.
Indian markets have been hit since Washington imposed tariffs, making it the worst-performing market among emerging economies by 2025, with record outflows of foreign investors.
BC Premier David Eby is blasting India over liquefied natural gas and mineral exports during his week-long trade visit, as the two countries unravel a diplomatic crisis sparked by Canada accusing India of involvement in the killing of a prominent BC Sikh activist.
Carney to India
US-listed shares of major Indian companies rallied on the news. IT communications firm Infosys rose 3.53 percent in afternoon trade, consultant Wipro rose 7 percent, HDFC Bank gained 3.4 percent and the iShares MSCI India exchange-traded fund gained 3.3 percent.
Prime Minister Mark Carney will visit India in the coming weeks, according to India’s high commissioner to Canada, as both countries look to alienate trading partners in the face of Trump’s trade war.
Carney’s visit follows the commitment of both leaders to launch negotiations on a new trade agreement called the Comprehensive Economic Partnership Agreement (CEPA), which was announced when the two leaders met at the G20 Summit in South Africa last November.
At the time, Carney’s office said it had accepted Modi’s invitation to visit India “in early 2026.”
On Saturday, Trump teased a deal for India to buy Venezuelan oil after the United States captured Venezuelan President Nicolas Maduro in a military raid in early January.
The deal comes after months of intense trade talks between the world’s two largest democracies.
Last August, Trump doubled import duties from India to 50 percent to pressure New Delhi to stop buying Russian oil, and earlier this month he said the rate could rise again if it did not stop its purchases.
The purchase of Venezuelan oil will help replace Russian oil purchased by India, the world’s third largest oil exporter.
