India–US Trade Deal Finalized: Tariffs Slashed from 50% to 18% in Major Economic Breakthrough
India and the United States have finalized a long-awaited trade deal that sharply reduces U.S. tariffs on Indian goods from an effective 50% to 18%, easing months of trade tension and delivering a significant boost to exporters, investors, and bilateral relations.
The agreement, announced after a call between Prime Minister Narendra Modi and U.S. President Donald Trump, rolls back the punitive levies imposed in 2025. Those duties included a base tariff and an additional penalty linked to India’s purchases of Russian oil. Under the new arrangement, Washington has removed the penalty and reset the overall tariff to 18%, giving Indian exports a competitive edge over several Asian peers.
President Trump framed the deal as a breakthrough rooted in diplomacy and reciprocity. In a social media post, he said the two countries had agreed to a trade pact “out of friendship and respect” for Prime Minister Modi, adding that the reduced tariff would take effect immediately. Trump also said India would expand purchases of U.S. goods—spanning energy, agriculture, technology, and aircraft—helping narrow the trade imbalance.
From India’s side, the response has been upbeat. Prime Minister Modi thanked Trump for the decision, saying the tariff cut would help “Made in India” products compete more effectively in the U.S. market and unlock opportunities when “the world’s largest democracies work together”. Indian officials have emphasized that the pact supports export growth, improves market access in key sectors, and strengthens investor confidence at a time of global uncertainty.
Markets quickly reflected that optimism. Indian equities and the rupee rallied following the announcement, with investors welcoming clearer trade rules and the prospect of stronger export earnings. Analysts note that the lower tariff rate places India ahead of several export-oriented economies facing higher U.S. duties, potentially diverting orders toward Indian manufacturers.
Beyond immediate market gains, the deal carries strategic benefits. It signals a reset after last year’s tariff escalation, deepens economic cooperation, and aligns broader goals—from supply-chain resilience to energy security. While officials say this is an initial phase with technical details still to be finalized, both sides have indicated momentum toward a broader, longer-term trade framework.
For businesses on both sides, the message is clear: lower barriers, greater certainty, and a renewed push to expand one of the world’s most consequential economic partnerships.
