Donald Trump has announced a trade deal with India that would reduce U.S. tariffs on Indian goods to 18%, down from 50%, in exchange for India ending purchases of Russian crude and easing barriers affecting U.S. exporters.
Trump made the announcement on Monday, 2 February, after a phone call with Narendra Modi, posting the outline on Truth Social.
A White House official told Reuters that Washington will also rescind a separate 25% punitive duty imposed on all imports from India over its Russian oil buying. That surcharge had been applied on top of a 25% “reciprocal” tariff rate, taking the combined burden on affected imports to 50%.
Trump said India would switch to buying oil from the United States and could also buy from Venezuela. Reuters reported on 30 January that the United States had been pitching Venezuelan crude to India as New Delhi sought tariff relief and as its Russian intake slowed.
Key implementation details remain unclear. Reuters said that, as of late Monday in Washington, the White House had not issued a presidential proclamation or a Federal Register notice, which are typically required to change tariff rates. The public statements did not specify when the 18% rate would start, the timetable for ending Russian purchases, which trade barriers would be reduced, or what enforcement would apply.
Modi welcomed the lower tariff rate, writing on X that “Made in India” products would now face an 18% duty in the United States, and thanked Trump for the announcement. India’s trade minister, Piyush Goyal, said the agreement would draw the economies closer and help India obtain U.S. technology.
Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.
When two large economies and the…
— Narendra Modi (@narendramodi) February 2, 2026
Trump said Modi had committed India to “BUY AMERICAN at a much higher level” and to purchasing more than $500bn of U.S. energy, including coal, along with technology, agricultural and other products. A Reuters follow-up report said officials have discussed increased Indian imports of U.S. petroleum, defence equipment, aircraft, telecommunications equipment and pharmaceuticals, and limited additional access for some U.S. farm products.
Financial markets in India and Indian-linked assets reacted quickly. Reuters reported that U.S.-listed shares of major Indian companies rose on the news, including Infosys, Wipro and HDFC Bank, and that the iShares MSCI India exchange-traded fund advanced. Reuters also reported that India’s benchmark Nifty 50 rose by nearly 3% and the rupee strengthened as investors assessed lower trade friction with the United States.
In Washington, business groups gave a mixed response. U.S. Chamber of Commerce said the announcement was a step towards a broader market-opening agreement, while a coalition of small businesses calling itself We Pay the Tariffs said an 18% rate still represents a sharp rise from earlier tariffs on Indian imports and would raise costs for U.S. importers.
The deal lands amid legal uncertainty over Trump’s wider tariff programme. Reuters reported that the administration is racing to complete framework deals with major trading partners before the Supreme Court of the United States rules on whether “reciprocal” tariffs imposed under the International Emergency Economic Powers Act can stand, and that officials expect agreements to continue regardless of the court’s decision.
For India, the U.S. announcement comes days after it concluded a separate trade agreement with the European Union. The European Commission said that deal is expected to eliminate or reduce tariffs on 96.6% of EU goods exports to India by value, while Reuters reported that some EU farm products were excluded from tariff reductions.
Energy is now the main test. India is the world’s third-largest oil importer and depends heavily on overseas supply. Russian crude, sold at a discount since 2022, has helped limit India’s import costs, and any rapid shift could affect refinery margins and domestic fuel pricing. Reuters reported that India’s Russian purchases have already begun to ease, with January imports around 1.2 million barrels a day and projections of about 1 million bpd in February and 800,000 bpd in March. Replacing those barrels with U.S., Venezuelan or Middle Eastern supply, and on what terms, will determine how quickly New Delhi can deliver on its pledge and whether the tariff cut holds.
