President Trump imposed a 25% punitive tariff on India on purchases of Russian crude oil, in addition to a 25% “reciprocal” tariff.
US President Donald Trump has agreed to reduce US tariffs on Indian goods from 50% to 18% in exchange for India to lower trade barriers, stop buying Russian oil and instead buy oil from the US and possibly Venezuela.
“Out of friendship and respect for Prime Minister Narendra Modi, we have agreed to a trade agreement between the United States and India, effective immediately, as requested by Prime Minister Narendra Modi. Under this agreement, the United States will reduce our reciprocal tariffs, from 25% to 18%,” President Trump said in a social media post after his phone conversation with Indian Prime Minister Narendra Modi.
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A White House official told Reuters that the United States would lift punitive 25% tariffs on all imports from India, which imposed a 25% “reciprocal” tariff on all imports from India.
Mr. Modi also pledged to purchase $500 billion worth of U.S. energy, technology, agricultural products and other products, Mr. Trump added.
“I am happy to speak with my dear friend President Trump today. I am pleased to see an 18% reduction in tariffs on Indian-made products,” PM Modi said in a post on social media X. “On behalf of the 1.4 billion people of India, I extend a huge thank you to President Trump for this great announcement.”
“It certainly took a long time for the agreement to come to fruition,” said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Society. “18% is close to the level of Southeast Asian products going to the United States.”
But experts also cautioned that it may be too early to tell whether this is a trade or customs deal.
“Prime Minister Modi welcomed the news, but did not restate President Trump’s claim that India is lowering tariffs on U.S. goods,” said Bina Najibullah, vice president of research and strategy at the Asia Pacific Foundation of Canada. “So far, it appears that we have an agreement on tariffs and a phased relaxation of tariffs…This remains important progress.”
Tense deal
The agreement came after months of tense trade negotiations between the world’s two largest democracies.
Last August, President Trump doubled tariffs on imports from India to 50% in a bid to pressure New Delhi to stop buying Russian crude, and earlier this month said the tax rate could rise again if imports were not curbed.
The purchase of Venezuelan crude will help India, the world’s third-largest oil importer, replace some of the Russian crude it buys.
India has been a buyer of Venezuelan oil for many years, as recently as a year ago, Ziemba told Al Jazeera. “The question will be on what terms and at what price.”
India relies heavily on oil imports, meeting about 90% of its needs, and imports of cheap Russian crude have helped lower import costs since Russia invaded Ukraine in 2022 and Western countries imposed sanctions on Russia’s energy exports.
Recently, India has started slowing down its oil purchases from Russia. Production is expected to fall from around 1.2 million barrels per day (bpd) in January to around 1 million barrels per day (bpd) in February and around 800,000 barrels per day (bpd) in March, Reuters reported.
The Indian market has been hit since the imposition of tariffs by the US government, and a record exodus of foreign investors will make it the worst-performing market among emerging economies in 2025.
Despite the tariff relief, “India will continue to de-risk and diversify,” Najibullah said. The process began in the wake of unforeseen circumstances, including punitive U.S. tariffs and deteriorating relations with the United States.
The announced tariff cuts come days after India and the European Union agreed to a free trade agreement after nearly two decades of negotiations that could affect up to 2 billion people. The agreement will allow free trade in almost all goods between the 27 EU countries and India, including everything from textiles to medicine, and will also reduce high import taxes on European wine and cars.
