India-US Trade Ties Warm Up As Modi-Trump Call Paves Way For Deal, Tariffs Cut To 18%

India-United States relations have witnessed renewed warmth, with long-pending differences over a bilateral trade deal finally appearing close to resolution. Following a phone conversation between Prime Minister Narendra Modi and US President Donald Trump, the trade impasse between the two countries has largely eased, with direct implications for Indian exports and global trade.

Prime Minister Modi shared details of the conversation on social media platform X, describing President Trump as his ‘dear friend.’ He said he was pleased to learn that tariffs imposed by the United States on ‘Made in India’ products would now be reduced to 18 per cent. The Prime Minister thanked President Trump for this decision on behalf of India’s 1.4 billion people.

In his post, PM Modi wrote that when two of the world’s largest economies and biggest democracies work together, it directly benefits their citizens and opens up new avenues of cooperation.

He also praised President Trump’s leadership in promoting global peace, stability, and prosperity, adding that India supports his efforts toward peace.

Deal Based On Mutual Respect And Friendship

Earlier, President Trump had also announced the agreement on his social media platform, Truth Social. Referring to Prime Minister Modi as a friend, Trump said that based on mutual respect, friendship, and PM Modi’s request, the United States and India had agreed to a trade understanding with immediate effect.

He clarified that India would no longer face a 25 per cent tariff, as duties would now be reduced to 18 per cent. Trump also stated that India would move toward eliminating tariffs on American products, a step seen as significant for the trade balance between the two nations.

There had been confusion in India over whether tariffs had been cut from as high as 50 per cent to 18 per cent. In April, the US had imposed a 25 per cent tariff on India, which was later doubled to 50 per cent over India’s purchase of Russian oil during the Ukraine war.

US Ambassador to India Sergio Gor addressed the issue, confirming that following the Modi-Trump conversation, the overall tariff would now stand at 18 per cent. However, procedural formalities may take some time.

India To Buy Venezuela Oil Replacing Russia

Alongside tariff relief, the issue of Russian oil resurfaced. Trump claimed India would reduce oil purchases from Russia and instead increase imports from the US and possibly Venezuela. He emphasised that the trade deal extends beyond tariffs to include energy, geopolitics, and global security.

Trump also said he expects the US to sell over USD 500 billion worth of goods to India, spanning energy, technology, agriculture, coal, and other American products, strengthening his ‘Buy American’ policy.

India Outpaces Its Neighbours

Before this agreement, India was among the economies on which the US imposed steep tariffs of up to 50 per cent. With the new rates now set to take effect, competition in the US market has become easier for Indian exporters.

India: Indian goods will now face only an 18 per cent tariff.

Pakistan: Pakistan will still have to pay a 19 per cent duty.

Bangladesh and Sri Lanka: Despite being textile hubs, these countries will continue to face a 20 per cent tariff.

Vietnam: Considered a manufacturing powerhouse, Vietnam is also subject to a 20 per cent tariff.

China: India’s biggest rival, China, continues to face a 34 per cent tariff, nearly double that imposed on India.

This will directly benefit India’s textile, gems and jewellery, and manufacturing sectors, as their products will now be cheaper in the US market compared to those from China and Vietnam.

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