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Lower US tariffs mean Indian exporters face lower cost barriers to enter the US market, especially in sectors such as textiles, apparel, seafood, chemicals and auto components.
US President Donald Trump with PM Narendra Modi (Photo: AP)
In a major diplomatic breakthrough after months of intense negotiations and tense moments, India and the United States finalized an agreement trade dealAfter talks with Prime Minister Narendra Modi late on Monday night, US President Donald Trump reduced the tariff from 25 percent to 18 percent.
Announcing details of the phone conversation, Trump said Washington would immediately reduce tariffs previously imposed on Indian goods. He claimed that in return, India Will take steps to “zero” its own tariff and non-tariff barriers against US products.
Responding to the gesture, PM Modi He said on social media that he had a “wonderful” conversation with Trump and thanked him for reducing tariffs on Made in India products to 18 percent. However, he refused to make any commitment to stop purchases of Russian oil or to reduce all tariff and non-tariff barriers to zero – as claimed by the US President.
As the two countries mark a historic moment in the talks, here’s what we know so far:
Trade Deals and Tariffs: What is the Agreement?
In the absence of a formal statement outlining trade dealThere is still some ambiguity on what the two leaders agreed upon. Although the Indian side did not clarify its stance on buying Russian oil or buying $500 billion of US goods, the fact that the 50 per cent US tariff on India – one of the highest rates imposed on any country – will be reduced to 18 per cent is a significant achievement.
The deal comes just days after India and the EU announced what both sides have referred to as the “mother of all” trade deal. While the EU as an economic bloc is India’s largest trading partner, the US remains the single largest trading partner.
Based on Trump and PM Modi’s social media posts, we now know that:
• Reciprocating duty on India reduced to 18 percent
• Trump has said that India will reduce its tariffs on American products to 0 percent
• US President claims, India will stop buying Russian oil
• Trump said, India has committed to buy American energy, technology, agriculture, coal worth 500 billion dollars.
• The new tariff rate has come into effect with immediate effect.
market access
Lower US tariffs mean Indian exporters face lower cost barriers to enter the larger US market, especially in sectors such as textiles, apparel, seafood, chemicals and auto components. With the 18 per cent rate cut, India may now be better positioned in some US markets than rivals such as Vietnam, Thailand and Indonesia.
Trade analysts highlight that specific Indian export sectors will gain access and competitiveness due to lower tariffs. These include:
• Textiles and apparel: US absorbs ~28% of India’s textile exports; Lower tariffs will help restore competitiveness and pricing power.
• Seafood: India is the top shrimp supplier to the US; Tariff cuts boost export prospects.
• Autos and auto ancillaries: Lower trade costs could help retain US orders and strengthen India’s role in global supply chains.
• Chemicals and consumer goods: Low barriers to entry make it easier for chemicals and some packaged foods to enter the US market.
In return, India has agreed to reduce its own import duties on US products, effectively opening the Indian market to US exporters including energy, technology, agriculture, coal and others. However, it is important to note again that the deal reportedly includes zero tariffs and barriers to many US goods, although a formal schedule and timeline have not yet been made public.
Russia–Ukraine war and Venezuelan oil
On social media, President Trump said India would stop purchasing Russian oil and instead increase energy imports from the US and potentially Venezuela as part of the trade deal, touting the change as helping “end the war with Russia and Ukraine”. “This will help end the war in Ukraine that is going on right now, in which thousands of people are dying every week!”
The US had specifically imposed a punitive tariff of 25 percent on Indian imports because India was buying Russian crude, doubling India’s overall tariff burden. According to Reuters, the first tariff hike (to 50 percent) was linked to India’s Russian oil imports, and the removal of additional tariffs was linked to India’s reported agreement to curb those purchases.
Although Trump may have claimed that India has agreed to stop buying Russian oil, there has been no commitment from the Indian side in this regard. PM Modi also did not confirm this in his social media post and thanked the US President for the tariff cut.
Sergio Gore: the vital link
Even before Trump announced the historic agreement on social media — full of big figures and capital letters — it was Sergio Gore, his trusted lieutenant in New Delhi, who put both countries at odds by dropping a big gesture on Monday.
Gore, 38, took over as US ambassador to India just a month ago and has already emerged as a central figure in Trump’s efforts to revive US-India ties battered by tariff frictions and broader strategic challenges. Even before he formally took charge, Gore arrived with a gift – a photo of Prime Minister Narendra Modi with Trump, signed by the US president and inscribed with the words: “Mr. Prime Minister, you are great.”
Trump’s selection of the trusted aide was widely read in diplomatic circles as a deliberate move by Washington to deploy a pragmatic envoy to New Delhi – someone with immediate access to the Oval Office and influence within it.
Speaking to CNN-News18 after the deal was announced, Gore said, “It’s a credit to President Trump and Prime Minister Modi… There is a great personal relationship between the two leaders that drives this deal. The possibilities between India and the United States are limitless.”
‘PM Modi is a friend’
Beyond economics and tariffs, what was different about the announcements of both Trump and Gore was the US President’s deep personal rapport with PM Modi.
While announcing the 18 percent tariff cut, Trump said his deal with India came “out of friendship and respect for Prime Minister Modi.” In his social media post he wrote that “It is an honor to talk to Prime Minister Modi… He is one of my best friends and a powerful and respected leader of his country”.
Addressing X., Gore also said that “President Trump really considers Prime Minister Modi a great friend!” And praised the trade agreement underscoring the strong US-India relationship.
Expressing this sentiment, PM Modi posted on Twitter that “It was wonderful to speak with my dear friend President Trump today.”
Trump’s repeated use of the word “friend” – and extended by Gore – came at a time when India-US relations were under real strain: increased tariffs, disagreements over Russian oil, and broader geopolitical pressures involving Ukraine. The trade agreement itself was not merely technical or economic; It was announced as the product of a personal conversation between Trump and PM Modi rather than a routine bureaucratic conversation.
The language underlines that the Trump-Modi relationship is largely driven by personal rapport, with trust between the two leaders shaping the outcomes of formal interactions as well. By calling PM Modi a friend, Trump was signaling to domestic and international audiences that India is seen as a special partner – different from other countries facing US trade pressure.
Reactions after the deal
Indian markets were among the first to react after the announcement. Indian equity benchmarks started the week at record highs, boosted by the India-US trade deal breakthrough, which revived investor sentiment. The Sensex rose nearly 2,300 points at the open, while the Nifty added nearly 700 points in early deals, marking a sharp shift from moderation to risk-on optimism.
Support was also intense from the United States. US Under Secretary of State Jacob Helberg welcomed the agreement, saying it would deepen industrial cooperation and create momentum for specific joint projects, including critical minerals and technology cooperation.
External Affairs Minister S Jaishankar, who is in the United States, said he “welcomed the announcements on bilateral trade”. In a post on X, he said: “This will create more jobs, spur growth and spur innovation in both economies. It will strengthen ‘Make in India’ efforts and encourage trusted technology ties.”
Union Home Minister Amit Shah called it a “big day for India-US relations” and congratulated both PM Modi and Trump for this “historic deal”.
Union Minister Ashwini Vaishnav said that India and America have great potential to work together for peace and development. “America and India are the world’s largest democracies. Both countries are natural allies. Together, India and America have great potential to work for peace and development,” he said on X.
However, the Indian opposition was not impressed. Congress leader Jairam Ramesh said that it seems that Trump dominates PM Modi. “He (Trump) announced the halt of Operation Vermillion from Washington DC. He announced updates on India’s oil purchases from Russia and Venezuela from Washington. He has now announced the India-US trade agreement from Washington, the full details of which are awaited. President Trump clearly seems to have some influence on Prime Minister Modi – who is now embarrassed to even be seen with him, leave alone a normal embrace.
Ramesh also criticized the pattern in which Indians were reportedly learning about their government’s actions from the US President’s announcements. He said, “It seems that Prime Minister Modi and President Trump spoke to each other today. This information is not provided by the Indian side but by the US Ambassador to India. This seems routine now – India gets to know about the actions of its government only from President Trump or his appointees. Trump-dependence.”
February 03, 2026, 10:04 IST
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