India and the US have recently signed a bilateral trade deal under which the US will reduce tariffs on Indian goods to 18% from 50%. Indian PM Narendra Modi has welcomed the decision, saying he is happy that Indian products will now have a reduced tariff of 18%. This deal has come as a saviour for Indian exporters who were paying steep duties for entering the US markets from August 2025.
In August 2025, the US government imposed a 25% tariff with an additional 25% duty on India for buying Russian crude oil and military equipment. These taxes were important on the existing tariffs on Indian products. As per the new announcement, the overall duty is 18% now.
As Trump said, in exchange for reduced traffic, India will now halt the Russian oil purchases and lower the trade barriers. The trade deal includes higher Indian purchases of US energy, technology, coal, and farm products. It is the first phase of a wider impact; it will be negotiated later. The US president also mentioned that India agreed to purchase more US goods with purchases rising to around $500 billion.
India has opened the door for limited market access in agriculture for the EU under a trade deal. Although Trump said India will not reduce the tariffs to zero, there is no official announcement on which products will have no duties or phased cuts.
Impact on Russian Oil Impact
Soon, after the deal, Indian refiners have reduced the purchaseof Russian oil and diversified the supply to the US, Africa, the Middle East, and also South America. Still, the refiners need some time to get out of Russian contracts, and the government has not ordered a full halt.
Key Benefits for India
According to the exports’ lobby, FIEO, the cut in the US tariff to 18% will give a good hype to INdian exports primarily in textiles, pharmaceuticals, apparel, chemicals, jewellery, food, footwears.
This trade deal and the announcements have shown positivity in investors’ sentiments. Soon after the decision, the Indian rupees rise over 1%, the Nifty 50 gained around 3% after jumping around 5%, and the 10-year bond outcome falling around 5 basis points.
Experts conclude that although this new decision will support capital inflows, exports, and the ruble, the full half of Russian oil purchases will take time.
Frequently Asked Questions
What is the US tariff on India now?
As announced by the government, the Indian products will now have a reduced US tariff of 18%.
What is the new India trade deal?
As announced by U.S. President Trump, the US has signed a trade deal with India that will reduce U.S. tariffs on Indian products from 50% to 18%. In exchange, India will halt purchasing Russian oil and lower trade barriers.
How have Trump’s tariffs affected the US economy?
Trump’s tariffs have boosted the US government’s revenue. According to the report, the United States collected an estimated $287 billion in customs duties, taxes, and fees last year, which is triple the amount collected in 2024.
