India–US Trade Relations Enter a New Phase as Trump and Modi Seal Major Tariff Breakthrough
India and the United States have reached a pivotal moment in their trade relationship following a high-level phone conversation between US President Donald Trump and Prime Minister Narendra Modi. The talks culminated in a landmark trade understanding, signalling a reset in economic ties between the two countries.
Monday proved to be a significant day for global trade and diplomacy. After his discussion with Prime Minister Modi, President Trump announced that the United States would slash reciprocal tariffs on Indian goods from 25 percent to 18 percent. The move is expected to ease trade frictions and significantly improve access for Indian exporters to the American market.
The announcement marks a clear thaw in India–US relations, which had been strained by elevated tariffs. Responding to Trump’s statement on Truth Social, Prime Minister Modi welcomed the decision, noting that “Made in India” products would now face substantially lower duties. Expressing gratitude, Modi said, “On behalf of 1.4 billion Indians, I sincerely thank President Trump for this major announcement.”
Russian Oil Tariff Rolled Back
According to Reuters, the Trump administration will also withdraw an additional 25 percent tariff imposed over India’s purchase of Russian oil. A White House official confirmed that the decision follows India’s agreement to halt Russian oil imports. “In view of India’s commitment to stop purchasing Russian oil, we are removing the additional 25 percent tariff,” the official said.
“The Final Number Is 18”
Ahead of the formal announcement, speculation intensified after President Trump shared a photograph with Prime Minister Modi on Truth Social—without any caption. The image was the cover of India Today magazine’s “Newsmakers of the Year 2025” edition, featuring both leaders. Shortly afterward, a post from US officials urged followers to “stay tuned,” confirming that the two leaders had spoken.
Speaking to India Today after the announcement, US Ambassador to India Sergio Gor welcomed the outcome, calling it a successful and positive development. He revealed that President Trump had fondly recalled his previous visit to India and noted that Prime Minister Modi had extended an invitation for him to return.
Clarifying the tariff details, Gor stated that the reduction was from an earlier proposed level of nearly 50 percent down to a final rate of 18 percent. “The final number is 18. Whether it takes an hour or two days, there are some technical steps and paperwork to complete, but the number will remain 18,” he told India Today TV. Gor also mentioned that he had sent the India Today magazine cover to Trump during Republic Day celebrations and was surprised to see it posted publicly on Monday.
Trade Deal Confirmed
Addressing the long-awaited US–India trade agreement—delayed largely due to India’s firm stance on not opening its agricultural sector—President Trump confirmed that a breakthrough had finally been achieved.
Describing the tariff cut as a gesture of “friendship and respect,” Trump wrote on Truth Social, “Out of friendship and respect for Prime Minister Modi, and at his request, effective immediately, we have agreed to a trade deal between the United States and India, reducing reciprocal tariffs from 25% to 18%.”
Trump further stated that during the call, Prime Minister Modi agreed to stop purchasing Russian oil and redirect India’s energy imports toward the United States and potentially Venezuela. Linking the decision to broader geopolitical goals, Trump claimed the move would help efforts to end the Russia–Ukraine war.
“It was an honor speaking with Prime Minister Modi this morning,” Trump posted. “He is one of my closest friends and a strong, highly respected leader. We discussed many things, including trade and bringing the war between Russia and Ukraine to an end. He agreed to stop buying Russian oil and instead buy much more from the United States.”
Trump also asserted that India had committed to purchasing over $500 billion worth of American energy, technology, agriculture, coal, and other products. Praising their working relationship, he added, “Prime Minister Modi and I are people who get things done—something that can’t be said about most.”
Taken together, the announcements underline a renewed momentum in India–US relations, with trade, energy cooperation, and strategic alignment now moving firmly back to the centre of the partnership.