Highlights:
-
US tariffs on Indian goods reduced from 25% to 18%
-
India to cut tariffs and non-tariff barriers on US goods to zero
-
India commits to buying more than $500 billion worth of US products, including energy
-
Leaders emphasize strong personal and strategic partnership
- Advertisement - -
Trade deal improves India’s position against competing exporters
Following a phone call with Indian Prime Minister Narendra Modi on February 2, 2026, US President Donald Trump announced a new trade deal between the United States and India. The agreement reduces US tariffs on Indian goods from 25% to 18%. In exchange, India will reduce tariffs and non-tariff barriers on American goods to zero and increase its purchase of US products, including energy, technology, and agricultural items.
India Welcomes Tariff Reduction and Strengthened Ties
Prime Minister Modi expressed satisfaction with the deal, stating, “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.” He emphasized the mutual benefits when “two large economies and the world’s largest democracies work together,” highlighting the opportunity for “mutually beneficial cooperation.”
Details of the US-India Trade Agreement Under Trump
President Trump described the deal as being made “out of friendship and respect for prime minister Modi, and at his request.” He announced on social media that the United States will reduce tariffs on Indian imports immediately to 18%. India, in turn, will eliminate tariffs and non-tariff barriers on US goods.
Trump also noted that India has committed to purchasing over $500 billion worth of American products, including energy, technology, agriculture, and coal. “Our amazing relationship with India will be even stronger going forward,” Trump said. He added, “Prime Minister Modi and I are two people that get things done, something that cannot be said for most.”
Strategic Impact of the Trump-US-India Trade Deal
The new tariff levels give India a competitive advantage over other export economies, as US tariffs on Indonesia, Vietnam, Bangladesh, and China remain higher—ranging from 19% to 34%. This trade deal follows stalled negotiations due to earlier tariff increases, including a 50% US tariff on Indian goods imposed by Trump.
Broader Discussions Between Trump and Modi
In addition to trade, Trump and Modi discussed the ongoing conflict in Ukraine. Trump said Modi agreed to stop buying Russian oil and increase energy purchases from the United States and possibly Venezuela. Trump stated, “This will help end the war in Ukraine, which is taking place right now, with thousands of people dying each and every week.”
Background and Next Steps in US-India Relations
The latest phone call builds on previous talks between the leaders, including their October 2025 discussion and a February 2025 meeting aimed at finalizing a trade agreement. The announcement coincided with India’s External Affairs Minister S. Jaishankar visiting Washington, D.C., indicating coordinated efforts.
Both Trump and Modi reiterated their commitment to deepen economic ties and enhance strategic cooperation. Modi said, “I look forward to working closely with him to take our partnership to unprecedented heights.”
