The United States and India have reached a new trade agreement that lowers tariffs on goods exchanged between both countries, President Donald Trump announced Monday, marking a significant shift in economic relations between the two major democracies.
In a post on Truth Social following a phone call with Indian Prime Minister Narendra Modi, Trump said both governments agreed to reduce trade barriers immediately. Under the deal, the United States will cut its reciprocal tariff on Indian goods from 25% to 18%, while India will move to eliminate tariffs and non-tariff barriers on American products.
Trump said Modi also committed to sharply increasing purchases of American goods across multiple sectors, including energy, agriculture, coal, and technology. According to the president, India plans to buy more than $500 billion worth of U.S. products over time as part of the agreement.
“He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” Trump wrote, linking the energy shift to broader efforts to end the war between Russia and Ukraine.
In the same statement, Trump described Modi as “one of my greatest friends” and said the agreement reflects mutual respect and long-standing cooperation between both leaders.
Trade negotiations between Washington and New Delhi stalled last year amid concerns over India’s continued reliance on Russian oil. In August, Trump imposed a 25% tariff on Indian imports in response to those purchases, in addition to a separate reciprocal levy that also stood at 25%.
Monday’s announcement confirms a rollback of those measures. Trump said the reduced 18% tariff rate takes effect immediately, while India will move forward with eliminating barriers facing U.S. exporters.
Modi later confirmed the development in a post on X, welcoming the tariff cut on Indian exports.
“Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” Modi wrote.
“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” he added, praising Trump’s leadership on global peace and stability.
The announcement comes one week after India finalized a major free trade agreement with the European Union, a deal Modi described as the “mother of all deals.” Analysts previously suggested progress with Europe might accelerate negotiations between India and the United States, a prediction now reflected in Monday’s breakthrough.
