US-India trade deal announced as Trump lowers tariffs after Modi talks

The United States will lower reciprocal tariffs on Indian goods to 18 per cent from the current 25 per cent under a new trade deal, US President Donald Trump said on Monday following a phone conversation with Prime Minister Narendra Modi.

Speaking after the call, Trump said the decision would take effect immediately and described the agreement as a result of his discussions with Modi.

Modi welcomed the announcement, saying he was pleased that tariffs on Indian exports had been reduced.

“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” Modi said.

The prime minister said cooperation between the two countries would deliver wider benefits.

“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” he said.

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

Modi also praised Trump’s global leadership and expressed support for his efforts on peace.

“President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace,” he said on ‘X’.

He added that he looked forward to working closely with Trump to take the bilateral partnership to unprecedented heights, without referring to several other issues raised by the US president in his social media post.

In a statement, Trump said India would move to reduce tariffs and non-tariff barriers on American goods to zero, while also committing to major purchases from the United States.

“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25 per cent to 18 per cent,” Trump said.

India will “likewise move forward to reduce their tariffs and non tariff barriers against the United States, to zero”, he added.

Trump said Modi had also committed to buy American goods at a significantly higher level, including more than USD 500 billion worth of US energy, technology, agricultural, coal and other products.

“Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that get things done something that cannot be said for most,” he said.

Trump said the two leaders also discussed ending the war between Russia and Ukraine.

“He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” Trump said.

“This will help end the war in Ukraine, which is taking place right now, with thousands of people dying each and every week,” he added.

Trump and Modi last spoke by phone in October 2025. The two leaders had agreed at a meeting in February last year to finalise the first tranche of a bilateral trade agreement by the autumn.

Although several rounds of negotiations were held, progress on the deal stalled after Trump imposed 50 per cent tariffs on Indian goods, including 25 per cent punitive tariffs linked to India’s procurement of Russian crude oil.

The latest phone conversation took place on a day when External Affairs Minister S Jaishankar travelled to Washington DC.

Officials said India now faces lower tariffs compared with competing export economies, citing 19 per cent tariffs on Indonesia, 20 per cent on Vietnam, 20 per cent on Bangladesh and 34 per cent on China.

Official sources last week said India and the US had made “very significant” progress in negotiations for the trade deal.