US President Donald Trump on Sunday announced a reduction in reciprocal tariffs on Indian goods to 18 percent, lowering the rate from 25 percent, following a phone conversation with Prime Minister Narendra Modi and what he described as the sealing of a trade deal between the two countries.
The big announcement, made after telephonic conversation between the two leaders, brings down the overall tariff on India to 18 per cent from the earlier 50 per cent, which included the 25 per cent punitive levy on New Delhi for purchasing Russian oil.
Sharing details of the call on Truth Social, Trump said, “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 percent to 18 percent.”
Trump described Modi as “one of my greatest friends” and a “powerful and respected leader of his country,” adding that the two leaders discussed trade, global security and efforts to end the Russia Ukraine war.
Responding to the announcement, Prime Minister Modi welcomed the tariff reduction and underlined the broader significance of India US cooperation.
“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 percent,” Modi said. “Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”
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
The Prime Minister said closer coordination between India and the United States would unlock new opportunities for both countries. “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.
Modi also expressed support for Trump’s global leadership, saying, “President Trump’s leadership is vital for global peace, stability and prosperity. India fully supports his efforts for peace.” He added that he looked forward to working closely with Trump to take the partnership “to unprecedented heights.”
According to the US President, Prime Minister Modi also agreed that India would stop buying Russian oil and instead increase purchases from the United States and potentially Venezuela. Trump claimed the move would help bring an end to the war in Ukraine, which he said was “taking place right now, with thousands of people dying each and every week.”
Trump further said India would move ahead to reduce tariffs and non-tariff barriers on American products to zero. He added that Modi had committed to “BUY AMERICAN” at a much higher level, including energy, technology, agricultural products, coal and other goods. Trump claimed these purchases could exceed 500 billion dollars.
“Our amazing relationship with India will be even stronger going forward,” Trump wrote, adding that both leaders were people who “GET THINGS DONE.”
Speaking to CNN-News18, US Ambassador to India Sergio Gor confirmed that the 25 per cent punitive tariff on India was also removed as part of the trade deal announced by Trump.
Sergio Gor also wrote on X: "As I have said many times, President Trump genuinely considers Prime Minister Modi a great friend! Thrilled by the news of the trade deal this evening. The relationship between the United States and India has LIMITLESS POTENTIAL!"
As I have said many times, President Trump genuinely considers Prime Minister Modi a great friend! Thrilled by the news of the trade deal this evening. The relationship between the United States and India has LIMITLESS POTENTIAL! — Ambassador Sergio Gor (@USAmbIndia) February 2, 2026
The announcement by Trump comes just days after the announcement of a free trade agreement between India and the European Union, which has been widely termed as "mother of all deals."
Trade negotiations with the United States had slowed sharply after India US ties deteriorated in August, when Washington imposed a 50 percent tariff on Indian goods over New Delhi’s continued purchase of Russian oil.
The deadlock was broken after months of negotiations, eventually leading to the agreement.
The reset began in September, when President Trump said he hoped the issue would be resolved soon. Progress continued in December, when Trump and Prime Minister Modi spoke by phone and reviewed the state of the India US partnership.
A delegation from the office of the US Trade Representative, led by Deputy Trade Representative Ambassador Rick Switzer, was here in the national capital in December 2025 for trade talks.
The agreement marks a sharp shift from late 2025, when the Trump administration had raised tariffs on Indian goods to 50 percent over India’s continued energy ties with Russia. The quick resolution in the first month of 2026, coming soon after India presented its Union Budget, points to a more pragmatic approach.
A comparison among emerging economies underscores the sharp differences in US tariff treatment. Brazil and China face the steepest levies at 50 percent and 47.5 percent respectively. South Africa is subject to a 30 percent tariff, while Mexico faces a 25 percent rate. Vietnam falls in the 20 percent bracket, and Thailand, the Philippines, Malaysia and Indonesia are each levied 19 percent.
With its revised tariff rate of 18 percent, India now holds a clear advantage over most economies in South Asia and Southeast Asia. Bangladesh, Sri Lanka, Taiwan and Vietnam continue to face higher tariffs of 20 percent, while Pakistan, Indonesia, Malaysia, Thailand and the Philippines are subject to 19 percent. Cambodia is also taxed at a 19 percent rate.
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