Trump Announces Trade Deal With Modi: Zero Tariffs for US, 18% Charge for India in America

New Delhi: The United States and India have reached a trade agreement under which American reciprocal tariffs on Indian goods will be reduced from 25% to 18%, while India will eliminate all tariffs and non-tariff barriers on US products, US President Donald Trump announced on Monday (February 2).

Trump said the agreement was finalised after a phone call with Prime Minister Narendra Modi, writing on his social media platform Truth Social that the two leaders had "agreed to a trade deal".

About an hour before Trump's post, US Ambassador to India Sergio Gor said on X that the two leaders had spoken on the phone and urged followers to "stay tuned". Following Trump's announcement, Gor wrote he was "thrilled by the news of the trade deal" and said the relationship between the two countries has "LIMITLESS POTENTIAL".

Over half an hour after Trump's post, Modi responded on X, saying he was "delighted that Made in India products will now have a reduced tariff of 18%". He thanked Trump "on behalf of the 1.4 billion people of India for this wonderful announcement" and wrote that "when two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation". Modi added that he looked forward to "working closely with him to take our partnership to unprecedented heights". 

Notably, Modi made no mention of a trade deal being reached, nor did he reference the claims about stopping Russian oil purchases or the USD 500 billion commitment to buy American products that Trump had outlined in his post.

Wonderful to speak with my dear friend President Trump today. 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.

When two large economies and the…

— Narendra Modi (@narendramodi) February 2, 2026

Neither government has issued a formal press communique or detailed statement beyond the brief social media posts.

While the Indian prime minister was silent on the agreement, Indian ambassador to the US Vinay Kwatra, cabinet minister Ashwini Vaishnaw and later commerce and industry minister Piyush Goyal became the first Indian government officials to publicly acknowledge that a trade agreement had been reached. While all of them lauded it, none provided further details on the agreement.

Goyal said the agreement "reflects the power of two like-minded, fair-trading democracies working together for shared prosperity" and described it as "not just a trade deal" but "a historic turning point that will reshape India–U.S. relations and accelerate our journey towards Viksit Bharat 2047".

External affairs minister S. Jaishankar referred only to “announcements on bilateral trade” in his post on X. “A robust economic relationship is the strongest foundation for our strategic partnership,” he wrote.

Jaishankar is currently in the United States to take part in a meeting of Pax Silica, an initiative on critical minerals convened by US secretary of state Marco Rubio.

According to Trump's post, the United States will "charge a reduced Reciprocal Tariff, lowering it from 25% to 18%," while India will "reduce their Tariffs and Non Tariff Barriers against the United States to ZERO". Trump also said Modi had committed to "BUY AMERICAN, at a much higher level," adding that India would purchase more than $500 billion worth of US energy, technology, agricultural products, coal and other goods.

In its latest budget for coming year, the Indian government has allocated about $586 billion for annual expenditure. India’s bilateral trade with the United States, its single largest trading partner, stood at $220 billion in 2024. During Modi’s visit to Washington in February, which marked the launch of bilateral trade negotiations, both sides spoke of aiming for a trade target of $500 billion by 2030.

Trump further claimed that Modi had agreed to stop buying Russian oil and instead "buy much more from the United States and, potentially, Venezuela," a move he said would "help END THE WAR in Ukraine".

The post did not clarify whether an additional 25 per cent tariff imposed on India, which had taken total US tariffs on some Indian goods to 50 per cent, the highest imposed on any major trading partner, would be removed.

However, US embassy spokesperson confirmed that the “final tariff will be 18 percent”, which means that Russian oil penalty has been dropped.

The announcement comes after a year of trade tensions triggered by Trump's return to office and a sweeping executive order on reciprocal tariffs issued in April 2025. The order introduced a universal 10 per cent baseline duty on all imports, followed by country specific additional tariffs calculated on what the administration described as reciprocity. India was later singled out for the extra 25 per cent tariff in August over New Delhi’s Russian oil imports.

The announcement of the trade deal by phone call is also notable in light of recent remarks by US Commerce Secretary Howard Lutnick, who said India had earlier missed a priority trade deal window because Modi had not personally called Trump at a critical stage of negotiations. Lutnick suggested such direct engagement was central to how the administration finalised trade agreements.

Trump described the agreement announced on Monday as "effective immediately" and said it was reached "out of friendship and respect for Prime Minister Modi and, as per his request".

Opposition Congress party’s general secretary Jairam Ramesh criticised the manner of the announcement, noting that Trump had previously announced India-Pakistan ceasefire, updates on India's oil purchases from Russia and Venezuela, and now the trade deal from Washington as well. 

"Prime Minister Modi, for some reason, appears visibly under pressure in front of President Trump. Forget the customary bear hugs, he now even seems uncomfortable being seen alongside him,” Ramesh wrote on X. “It appears that Modi has finally conceded. This can certainly not be the “father of all deals.”

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