ECONOMY
US cuts tariff on Indian imports to 18%, scraps 25% ‘Russia tax’, India to buy $500-bn US goods
- IBJ Bureau
- Feb 03, 2026
US President Donald Trump has announced a trade deal with India that slashes US tariffs on Indian goods to 18 from 50 per cent in exchange for India halting Russian oil purchases and lowering trade barriers.
Mr Trump has announced the deal on social media following a call with Prime Minister Narendra Modi, noting that India would now buy oil from the US and potentially Venezuela.
A White House official has told the Reuters that the US was rescinding a punitive 25 per cent duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25 per cent “reciprocal” tariff rate.
Mr Trump’s announcement has added to positive sentiment over semiconductor-makers and artificial intelligence, lifting major indexes into positive territory on Monday.
Mr Modi has also committed India to “buy American” at a much higher level, in addition to buying more than $500 billion worth of US energy, including coal, along with technology, agricultural and other products, Mr Trump has added.
Until Mr Trump had returned to office and raised US tariff rates to double-digit levels last year, India had some of the world’s highest tariffs, with a simple applied rate of 15.6 per cent and an effective applied tariff of 8.2 per cent, according to World Trade Organization data.
Mr Trump’s Truth Social message provided few details, including on the start date for the lower tariff rates, the deadline for India to end Russian oil purchases, trade barrier reductions and which US products India had committed to purchasing.
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