Explained: This article explains the political background, key decisions, and possible outcomes related to Explained : Trump announces India ‘trade deal’ after Modi call and Its Impact and why it matters right now.
US President Donald Trump on Monday said he had agreed to a trade deal with India following a phone call with Indian Prime Minister Narendra Modi.Â
“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, ​we ​agreed to a Trade
Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%,” Trump said in a social media post.
Trump added that India had agreed to stop buying Russian oil, which he has claimed in the past. He said India would also reduce its import taxes on US goods to zero and buy $500 billion worth of US energy, ‌technology and agricultural products.
The president did not provide further details of the tariffs or the oil purchases, other than saying India would buy “much more from the United ​States and potentially Venezuela.”
Modi welcomes tariff cut
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The Indian government has not issued a statement, but Modi confirmed the tariffs reductions in a post on X.Â
“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” Modi said.
What tariffs has India faced?
India has faced two sets of tariffs from the US since Trump took office in January 2025.
In June, Trump announced a 25% tariff on goods from India claiming New Delhi had not done enough narrow a steep trade surplus.
Trump has also sought to put pressure on New Delhi over its increased purchases of Russian oil since Moscow launched its war in Ukraine.
In addition to the  so-called reciprocal tariffs of 25%, in August, Trump imposed an additional import tax of 25% on certain Indian products over the oil purchases, bringing the total to 50%, which is the highest among US trade partners.
On Monday, the White House said the additional 25% tariff on Indian imports would be dropped in response to India reducing Russian oil purchases.
Modi’s response on X did not mention any agreement on oil.Â
Edited by: Jenipher Camino Gonzalez