Trump announces trade deal with India

• India and the US agreed to a trade deal under which Washington will bring down the reciprocal tariff on Indian goods to 18 per cent from the current 50 per cent.

• The breakthrough follows a high-level telephonic conversation between Prime Minister Narendra Modi and US President Donald Trump on February 2.

• In a reciprocal move, India has committed to reducing trade barriers for American goods and significantly increasing imports across sectors, including energy, technology, and agriculture.

• President Trump said India will move forward to reduce “tariffs and non tariff barriers” against the US to zero, adding New Delhi would buy American goods, including energy, worth more than $500 billion.

• He also claimed that India has agreed to stop buying Russian oil.

Big relief for India

• In August 2025, Trump signed an executive order imposing an additional 25 per cent tariff on India, taking the total levy on Indian goods to the US to 50 per cent, citing India’s continued import of Russian oil.

• The new tariff has taken the India-US relations to an unprecedented low, with New Delhi terming Trump’s decision “unfair, unjustified and unreasonable”.

• The tension also had an impact on the ongoing trade negotiations between the two countries.

• The two sides held several rounds of negotiations on the trade deal.

• India now has lower tariffs compared to competing export economies.

India-US Trade Relations

• During 2021-25, the US was India’s largest trading partner. The US accounts for about 18 per cent of India’s total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.

• With America, India had a trade surplus (the difference between imports and exports) of $35.32 billion in goods in 2023-24. It was $41 billion in 2024-25 and $27.7 billion in 2022-23.

• In 2024-25, bilateral trade between India and the US reached $186 billion. India exported $86.5 billion in goods while importing USD 45.3 billion.

• In services, India exported an estimated $28.7 billion and imported $25.5 billion, adding a $3.2 billion surplus. Altogether, India ran a total trade surplus of about $44.4 billion with the US.

• In 2024, India's main exports to the US included drug formulations and biologicals, telecom instruments, precious and semi-precious stones, petroleum products, vehicle and auto components, gold and other precious metal jewellery, ready-made garments of cotton, including accessories, and products of iron and steel.

• Imports included crude oil, petroleum products, coal, coke, cut and polished diamonds, electric machinery, aircraft, spacecraft and parts, and gold.