U.S. President Donald Trump announced a major trade shift on February 2, 2026, saying he plans to lower American tariffs on Indian imports from 25 % to 18 % following an agreement with Indian Prime Minister Narendra Modi. Under the proposed deal, Trump said India agreed to substantially reduce and eventually stop its purchases of Russian oil — a key demand from Washington amid efforts to weaken Moscow’s revenue streams during the Russia-Ukraine war.
The tariff reduction marks a significant change in policy after months of elevated U.S. duties on Indian goods. Last year, Washington had slapped India with a 25 % “reciprocal” tariff and an additional 25 % penalty tariff tied directly to New Delhi’s Russian energy purchases, bringing some effective rates as high as 50 %. With India’s commitment, the United States will remove the punitive surcharge and lower the base rate to 18 %, closer to what it charges other trading partners such as the European Union and Japan.
Trump framed the agreement as part of a broader economic and geopolitical strategy. On his social media platform, he said the deal would not only reduce levies on Indian exports but also encourage India to increase its purchases of American goods, including energy, agricultural, and technology products. Trump claimed the commitment could reach $500 billion in U.S. purchases, and he linked the arrangement to efforts to exert broader pressure on Russia.
Indian leaders responded positively to the tariff announcement, with Prime Minister Modi posting on X (formerly Twitter) that he was “delighted” by the decision and thanked Trump for the reduction. However, Indian officials have avoided directly confirming some of the claims about stopping Russian oil purchases and the exact scale of future U.S. imports, underscoring that details are still being clarified.
Analysts say the tariff cut could offer a boost to Indian exporters who faced headwinds during last year’s trade tensions, which contributed to capital outflows and weakened market performance. India’s heavy reliance on imported energy — covering roughly 90 % of its needs — made the nation a large buyer of discounted Russian crude, a trend Washington sought to curtail. India has already shown signs of reducing its Russian oil volumes in recent months.
Despite optimism on both sides, some experts caution that the deal’s details will matter for long-term economic impact. Questions remain over how quickly India can eliminate Russian oil purchases without disrupting its energy security and how the tariff changes balance against broader trade reforms. The agreement also comes in the context of India’s recent trade pact with the European Union and wider efforts by New Delhi to diversify its global economic partnerships.
