$500 Billion Deal, No Russian Oil, 18% Tariffs: Inside the India–US Trade Agreement

US President Donald Trump on Monday announced a new trade agreement with India that includes reduced reciprocal tariffs and expanded market access, while claiming that New Delhi would halt purchases of Russian oil and significantly increase imports of American goods.

India has so far confirmed only the tariff reduction component of the deal. Prime Minister Narendra Modi welcomed the move following a phone call with Trump, describing it as a major boost for bilateral trade ties.

Union minister Ashwini Vaishnaw also termed the agreement a “win-win” deal for both countries.

India Confirms Tariff Cut After Trump–Modi Call

Following his conversation with Trump, Modi said Indian goods exported to the United States would now face a reduced tariff of 18%, down from the earlier 25% reciprocal levy and lower than the 19% rate applied to Pakistan.

In a social media post, Modi said he was “delighted” by the reduction and thanked Trump on behalf of the Indian people. He added that cooperation between the world’s largest democracies would unlock new opportunities for mutual growth.

Modi also praised Trump’s leadership on global peace and stability but did not mention any commitments related to Russian oil purchases or zero tariffs on US goods.

Sequence of Announcements

The first public indication of the agreement came from US Ambassador to India Sergio Gor in a social media post. Trump followed with a detailed statement on Truth Social more than an hour later, while Modi issued his response about two hours afterward.

Gor described the deal as a major boost to bilateral relations and said Trump regarded Modi as a close friend.

Trump’s Claims on Purchases and Russian Oil

In his post, Trump said the agreement went beyond tariff cuts, claiming that India would reduce tariffs and non-tariff barriers on US goods to zero and commit to purchasing more than $500 billion worth of American energy, agricultural products, technology and other goods.

He also said India had agreed to stop buying Russian oil and shift energy imports to the US and possibly Venezuela, linking the move to efforts to end the Russia–Ukraine war.

Trump said the deal was effective immediately and described Modi as a “powerful and respected leader.”

A White House official told HT that a 25% punitive tariff linked to India’s Russian oil purchases would be dropped as part of the arrangement, bringing the final tariff rate to 18%.

US Officials Welcome Deal

US Under Secretary of State Jacob Helberg welcomed the agreement, saying it would strengthen industrial cooperation and accelerate joint projects, particularly in critical minerals and advanced technologies. External Affairs Minister S Jaishankar is expected to visit Washington soon for related discussions.

What Is Confirmed So Far

• US tariffs on Indian goods reduced from 25% to 18%

• PM Modi publicly confirmed the new tariff rate

• Ashwini Vaishnaw confirmed a concluded “win-win” deal

• Trump said the agreement takes effect immediately

What Remains Unconfirmed by India

• Zero tariffs and non-tariff barriers on US goods

• $500 billion purchase commitment

• Halt to Russian oil imports

• Shift to US and Venezuelan energy supplies

So far, official Indian statements have focused only on tariff relief.

Background: A Year of Trade Tensions

The breakthrough follows nearly a year of difficult negotiations that began during Modi’s US visit in February last year. The two sides held six formal rounds of talks and several informal consultations, including a visit by the deputy US trade representative in December 2025.

Relations had been strained after Washington imposed steep tariffs on Indian goods, including a 25% levy linked to Russian oil imports. Other points of friction included immigration rules, defence ties with Russia and Trump’s past claims about mediating between India and Pakistan.

No detailed text of the trade agreement has been released so far. The announcement also comes shortly after India and the European Union finalised a major trade pact.