India and the United States on Monday announced a long-awaited trade breakthrough following a phone conversation between Narendra Modi and Donald Trump, bringing down tariffs on Indian goods and potentially resetting bilateral ties after nearly a year of tensions.
Prime Minister Modi confirmed that Indian exports to the US will now face a reduced tariff of 18%, a significant cut from earlier levels that had made India one of the most heavily tariffed economies globally. The announcement came after a series of social media posts by US officials and the two leaders late Monday night.
How the Announcement Unfolded
The first public signal of the breakthrough came at 9.16 pm from Sergio Gor, who posted on social media that President Trump had spoken with Modi. More than an hour later, Trump published a lengthy statement on Truth Social outlining what he described as a comprehensive trade deal between the two countries. Nearly two hours after that, Modi confirmed the tariff reduction in a post on X.
"Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%," Modi said, adding that cooperation between the two countries would unlock "immense opportunities for mutually beneficial cooperation".
While Modi's post did not explicitly mention a trade deal, Union minister Ashwini Vaishnaw later confirmed that India and the US had reached an agreement, calling it a "win-win".
What India Has Confirmed
India has publicly confirmed one key element of the agreement: the reduction of US tariffs on Indian goods to 18%, down from a reciprocal tariff of 25% and a peak effective tariff of 50% imposed earlier.
The new rate places India below Pakistan's 19% tariff and marks a sharp reversal from the punitive duties imposed last year, including a 25% levy linked to India's purchase of Russian oil.
Beyond the tariff cut, New Delhi has not released further details or confirmed additional commitments.
Trump's Claims: A Broader Deal
In his Truth Social post, Trump described a much broader agreement. He claimed India agreed to reduce tariffs and non-tariff barriers on US goods to zero, and to buy over $500 billion worth of American energy, technology, agricultural products, coal and other goods.
Trump also said India would stop buying Russian oil and shift energy purchases to the US and potentially Venezuela, linking the move to efforts to end the Russia-Ukraine war.
However, these claims have not been publicly confirmed by the Indian government.
Diplomatic Reset After a Turbulent Year
The breakthrough comes nearly a year after India and the US launched trade talks during Modi's visit to America last February. Over the past 12 months, the two sides held six formal negotiating rounds and multiple informal consultations, including a December 2025 visit by a US delegation led by Deputy Trade Representative Rick Switzer.
Relations had deteriorated after Washington imposed steep tariffs on Indian goods, alongside broader diplomatic friction over energy ties with Russia, immigration restrictions and geopolitical disagreements.
Timeline of Events
2025
- April 2: The United States implemented a 26% “reciprocal tariff” on a range of Indian imports as part of its broader “Liberation Day” trade measures.
- April 10: The administration temporarily suspended these tariffs for 90 days but kept a 10% duty in place on all U.S. imports.
- July 31: Washington announced a new 25% tariff on all products imported from India and warned that penalties would follow if India continued purchasing Russian crude oil.
- August 7: Tariffs on Indian goods were raised to 50%, the highest rate applied to any U.S. trading partner. The increase was again linked to India's ongoing oil trade with Russia.
2026
- February 2: The U.S. government lowered tariffs on Indian goods from 25% to 18%.
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