U.S. President Donald Trump announced on Monday a trade deal with India that reduces U.S. tariffs on Indian goods from 50% to 18%, in exchange for India stopping its purchases of Russian oil and lowering trade barriers.
Trump shared the announcement on social media following a call with Indian Prime Minister Narendra Modi, noting that India would now purchase oil from the U.S. and potentially from Venezuela.
A White House official told Reuters that the U.S. would also rescind a 25% punitive duty on all Indian imports imposed over its Russian oil purchases, which had been stacked on a 25% “reciprocal” tariff.
The announcement sparked rallies in U.S.-listed shares of major Indian companies. IT consulting firm Infosys rose 4.3%, Wipro jumped 6.8%, HDFC Bank gained 4.4%, and the iShares MSCI India ETF climbed 3%. Trump’s statement also boosted sentiment in semiconductor and AI sectors, lifting major indexes into positive territory.
Trump added that India had committed to a “Buy American” approach at a higher level and would purchase over $500 billion in U.S. energy, including coal, along with technology, agricultural, and other products. “They will likewise move forward to reduce their tariffs and non-tariff barriers against the United States to zero,” Trump said.
Before the deal, India had some of the world’s highest tariffs, with a simple applied rate of 15.6% and an effective applied tariff of 8.2%, according to World Trade Organization data. However, Trump’s announcement provided few details, such as the start date for lower tariffs, deadlines for India to stop Russian oil purchases, or the exact U.S. products India would buy. The White House had not issued a formal proclamation or Federal Register notice as of late Monday.
Previous trade deals with Asian partners like Japan and South Korea included large investment commitments into U.S. industries, but the India deal did not mention specific investments. Economists noted that the agreement brings India broadly in line with its Asian peers’ tariffs of 15–19%, easing a disproportionate drag on Indian exports and the rupee.
U.S. business groups reacted cautiously. The U.S. Chamber of Commerce welcomed the move as a step toward a broader market-opening trade agreement, while a coalition of over 800 small businesses called “We Pay the Tariffs” criticized the deal, warning that the new 18% tariffs would represent a “600% tax increase on American businesses compared to 2024.”
Indian Prime Minister Modi thanked Trump on social media, highlighting that Indian products would now face an 18% tariff. India’s Trade Minister Piyush Goyal said the deal would strengthen economic ties and provide opportunities for farmers, MSMEs, entrepreneurs, and skilled workers to innovate, manufacture, and trade globally.
The U.S.-India deal comes shortly after India finalized a long-awaited trade agreement with the European Union, reducing tariffs on over 96% of traded goods by value, though it excluded products like soybeans, beef, sugar, rice, and dairy.
The Trump administration is seeking to complete framework trade deals with major partners before the U.S. Supreme Court rules on whether to strike down Trump’s “reciprocal” tariffs under the International Emergency Economic Powers Act. A recent U.S.-Taiwan agreement shows the administration’s intent to continue such trade arrangements regardless of court decisions.
Purchases of Venezuelan oil would help replace some of the Russian oil previously bought by India, which relies on imports for roughly 90% of its oil needs. India’s imports of Russian oil have already begun to decline, from 1.2 million barrels per day in January to projected levels of 1 million bpd in February and 800,000 bpd in March, according to Reuters.
