US cuts tariffs on India to 18%

Washington/New Delhi, Feb 02 — The United States on Monday announced a sharp cut in tariffs on Indian goods, lowering duties to 18% from as high as 50%, in what both sides described as a breakthrough trade understanding between President Donald Trump and Prime Minister Narendra Modi.

The move follows a phone conversation between the two leaders and signals a reset in trade relations after months of strain triggered by Washington’s punitive duties on Indian exports.

President Trump said the decision was taken “out of friendship and respect” for Prime Minister Modi, adding that India had agreed to reduce trade barriers, curb purchases of Russian oil and significantly increase imports from the United States.

According to U.S. officials, Washington will also withdraw an additional 25% penalty tariff imposed on Indian imports over New Delhi’s continued buying of Russian crude, bringing overall duties down to a single 18% rate.

Markets Cheer the Announcement

The announcement sparked an immediate rally in U.S.-listed Indian stocks. Shares of Infosys, Wipro and HDFC Bank rose sharply, while the iShares MSCI India ETF gained more than 3%, reflecting investor relief after months of tariff-driven pressure.

Indian markets had suffered heavy foreign outflows in recent months, making India one of the worst-performing emerging markets this year.

India to Buy More from US

Trump said India had committed to purchasing more than $500 billion worth of U.S. energy products, including oil and coal, along with agricultural goods, technology and other items. He also claimed New Delhi would work toward cutting tariffs and non-tariff barriers on U.S. goods, though no specific timeline or product list was disclosed.

The agreement stops short of the massive U.S. investment pledges seen in recent trade deals with Japan and South Korea, and officials on both sides offered few operational details.

Strategic Relief for India

Economists say the deal brings India’s tariff levels broadly in line with other Asian economies and removes a major drag on exports and the rupee.

“This helps normalise India’s trade position at a time when global capital flows have turned cautious,” said Madhavi Arora of Emkay Global.

Modi Thanks Trump

Prime Minister Modi welcomed the move, calling it a positive step for Indian manufacturers. “Delighted that Made in India products will now face a reduced tariff of 18%,” he said in a post on X, thanking Trump for the decision.

While details remain limited, the announcement marks one of the most significant shifts in US-India trade ties in recent years and could offer much-needed relief to Indian exporters amid a slowing global economy.