NEW DELHI – Former U.S. President Donald Trump announced a new trade deal with India following a phone call with Prime Minister Narendra Modi, revealing that the agreement involves reduced tariffs and increased American purchases from India.
In a social media post on Truth Social, Trump stated that the two leaders had “agreed to a trade deal,” with the United States reducing reciprocal tariffs on Indian goods from 25% to 18%. Conversely, India will eliminate all tariffs and non-tariff barriers on U.S. products, he added.
US Ambassador to India Sergio Gor confirmed the call via X (formerly Twitter), describing the relationship as having “LIMITLESS POTENTIAL” and expressing enthusiasm about the deal. Modi responded later on X, expressing his delight over the reduced 18% tariff on “Made in India” products and thanking Trump on behalf of India’s 1.4 billion people. Modi emphasized that collaboration between two large democracies benefits their citizens and opens doors for mutual growth, though he did not explicitly confirm the trade deal.
Neither government issued detailed official statements beyond the social media announcements. However, Indian officials including Ambassador Vinay Kwatra, Minister Ashwini Vaishnaw, and Commerce Minister Piyush Goyal acknowledged that a trade agreement had been reached. Goyal called the deal a “historic turning point” that would reshape India-U.S. relations and support India’s vision of “Viksit Bharat 2047.”
External Affairs Minister S. Jaishankar, currently in the U.S. for a critical minerals forum, referred only to “announcements on bilateral trade,” emphasizing the importance of a robust economic partnership for strategic ties.
Details of the Deal
According to Trump, the U.S. will lower its reciprocal tariffs from 25% to 18%, while India will remove all tariffs and non-tariff barriers on American goods. Trump also claimed that Modi committed to “BUY AMERICAN” at a higher level, with India set to purchase over $500 billion worth of U.S. energy, technology, agriculture, coal, and other products.
Trump further stated that Modi agreed to cease Russian oil imports in favor of U.S. and possibly Venezuelan energy, a move aimed at helping to “END THE WAR in Ukraine.” The deal’s specifics regarding the previous 25% tariffs on certain Indian imports, which had raised U.S. tariffs to as high as 50%, remain unclear, though a U.S. embassy spokesperson confirmed the final tariffs will be 18%, implying the Russian oil penalty has been dropped.
Context and Reactions
The announcement follows a year marked by trade tensions, including a sweeping executive order in April 2025 that imposed a 10% baseline duty on all imports, with additional country-specific tariffs. India was targeted for an extra 25% tariff in August over Russian oil imports.
This direct phone call-based announcement underscores the importance of personal diplomacy, with U.S. Commerce Secretary Howard Lutnick previously suggesting that Modi’s personal engagement was crucial to finalizing trade agreements.
Opposition voices, including Congress Party’s Jairam Ramesh, criticized the manner of the announcement, expressing skepticism about the optics and suggesting Modi appeared under pressure during the public display. Ramesh remarked that Modi’s interactions with Trump seemed increasingly uncomfortable and questioned whether the so-called “deal” was truly in India’s best interest.
Outlook
The trade deal, described by Trump as “effective immediately,” marks a significant shift in India-U.S. economic relations. As both nations aim for a $500 billion bilateral trade target by 2030, the agreement signals a new chapter of cooperation amid ongoing geopolitical and economic challenges.
