US President Donald Trump announced a significant trade deal with India after a phone call with Prime Minister Narendra Modi, marking a pivotal moment in bilateral relations that have been strained by tariffs and geopolitical tensions. The agreement slashes US tariffs on Indian goods from 50% to 18% and commits India to halt purchases of Russian oil while boosting imports of American products worth over $500 billion.
The announcement came on Monday, February 2, 2026, via Trump’s post on Truth Social, where he detailed the outcomes of his morning conversation with Modi. He stated that India had agreed to stop buying Russian oil and instead purchase more from the United States and potentially Venezuela. In return, Trump immediately consented to lower tariffs, framing the deal as a gesture of friendship and respect for Modi.
This development follows months of escalating trade disputes, initiated when Trump imposed 50% tariffs on Indian imports in August 2025—the highest rate for any Asian country—citing trade imbalances and India’s ties with Russia amid the Ukraine war. The additional 25% tariff specifically linked to Russian oil purchases will be dropped under the new agreement, reducing the overall rate to 18%.
Modi welcomed the tariff reductions in a post on X, thanking Trump and emphasizing the benefits of cooperation between the world’s two largest democracies. “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 wrote, though he did not explicitly confirm the oil-related commitments.
The deal arrives just days after India secured a landmark free trade agreement with the European Union, which aims to eliminate tariffs on nearly all goods between India and the 27-member bloc. Analysts view the US-India pact as a strategic move to counter the EU’s influence and reinforce Washington’s trade posture amid global uncertainties.
The White House confirmed that the Russian oil-linked tariffs would be removed as part of the deal, aligning with Trump’s assertion that this move could help end the war in Ukraine by reducing funding to Russia. This aspect highlights the integration of trade policy with broader geopolitical goals, as the US seeks to leverage economic measures in conflict zones.
Critics in the United States, however, have raised concerns about the lasting impact of the agreement. Organizations like “We Pay the Tariffs,” representing small businesses, argue that the 18% rate is still six times higher than the pre-tariff average of 2.5%, effectively instituting a permanent tax hike on American importers that could hinder economic relief.
Looking ahead, the agreement is expected to ease bilateral tensions and may influence global trade dynamics, particularly in efforts to isolate Russia economically. Both leaders have signaled a commitment to deepening ties, with potential implications for energy markets and technological cooperation. The swift announcement underscores the ongoing recalibration of international trade alliances in a volatile geopolitical landscape.
