Washington, D.C. — The United States and India finalized a far-reaching trade and energy agreement Monday that will significantly lower U.S. tariffs on Indian goods to 18% and formalizes India’s commitment to phase out imports of Russian crude oil, officials said.
The announcement came from U.S. President Donald Trump following a phone call with Indian Prime Minister Narendra Modi, capping months of negotiations that were marked by heightened trade tensions last year.
Tariff Reductions After Trade Strain
Under the agreement, the U.S. will roll back steeper duties that had been imposed on Indian exports — including a punitive tariff linked to India’s previous purchases of Russian oil — bringing the overall rate to 18%.
The tariff rollback is expected to benefit Indian exporters across key sectors such as manufacturing, technology, pharmaceuticals, and services by improving price competitiveness in the U.S. market.
Energy and Strategic Shifts
A central pillar of the deal is India’s pledge to end imports of Russian crude oil, a major shift in its energy sourcing practices. India has been among the world’s largest buyers of Russian seaborne oil following Western sanctions on Moscow.
In return, the U.S. expects India to grow purchases of American energy products and broaden trade ties, a move aimed at narrowing the bilateral trade gap and promoting deeper economic interdependence.
Diplomacy and Market Reaction
Prime Minister Modi confirmed the agreement in a social media post, praising the reduced tariff rates and describing the pact as a boost for cooperation between the two democracies.
President Trump hailed the deal as a step toward a stronger long-term partnership, framing it as a strategic win for both economic and geopolitical interests.
Broader Implications
Analysts say the agreement could ease market pressures that Indian exporters faced under higher U.S. trade barriers and strengthen investor confidence. The pact also represents a broader alignment of trade policy with energy and security objectives at a time of global geopolitical volatility.
Details on the timing and mechanics of India’s transition away from Russian oil are not yet fully clarified, but the move marks a significant policy shift with implications for global energy markets.