After more than a year of haggling, US President Donald Trump on Monday announced a major trade deal between Washington and New Delhi that significantly de-escalates economic tensions between the two nations.
A White House official confirmed to the South China Morning Post that the deal will remove the 25 per cent punitive Russia oil tariffs.
Trump in a social media post earlier said that he held a phone call with Indian Prime Minister Narendra Modi.
“He [Modi] agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!”
Trump slapped Russia-related tariffs in August last year to penalise New Delhi for its purchases of discounted Russian crude oil, which Washington argued was financing the war in Ukraine.
With India negotiating its way out of the penalties, countries like China and Brazil remain the primary targets of Russia-linked punitive tariffs. Trump has repeatedly threatened Beijing with 100 per cent tariffs for continued purchase of Russian crude, but levies similar to those imposed on India have not been placed on Beijing.
A piece of legislation, which has Trump’s backing, also calls for 500 per cent tariffs on China over its Russian oil purchases. China is the largest buyer of Russian oil.
Combined with the base tariffs of 25 per cent, announced earlier last year, the total import tax on many Indian goods had reached 50 per cent before Monday’s rollback.
As per the trade deal, the so-called reciprocal tariff on 25 per cent has also been lowered to 18 per cent, “out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately”, Trump added.
India, in return, will “move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to zero”, as per the US president’s announcement.
Modi in a social media post gave a “big thanks” to Trump “on behalf of the 1.4 billion people of India for this wonderful announcement”.
“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.
Sergio Gor, Trump’s close aide and newly appointed American envoy to New Delhi, hailed the deal as a sign of Trump’s “genuine” feelings of friendship for Modi.
“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!” he said in a social media post.
According to experts, the breakthrough also clears the way for Trump’s previously stalled plans to visit India.
“The announcement of the US-India trade deal opens the door for a visit by President Trump to India in 2026 to celebrate the deal and launch new cooperative work on critical minerals, technology and resilient chains,” said Wendy Cutler, a vice-president of the Asia Society Policy Institute in Washington.
Last year, a Quadrilateral Security Dialogue, or Quad, summit did not materialise despite being scheduled for the autumn of 2025 in New Delhi.
SCMP had earlier reported that the “America first” president was unwilling to visit amid deteriorating US-India ties, primarily due to trade disputes, tariffs on Indian goods, including the Russia-linked punitive ones, and lack of progress on a bilateral trade deal.
Trump is expected to make a trip to China in April.
However, former trade negotiator Cutler cautioned that while the US has secured another deal with an “important trading partner”, “many of these so-called deals are still in the need of further work as they are still in the framework stage, with lack of details and timelines for implementation”.
Sourabh Gupta, an Asia-Pacific specialist at the Institute of China-America Studies, a think tank in Washington, described New Delhi as being in a “wrong direction of travel”.
“The Indians too would probably like a New Delhi visit to not be overshadowed by a China visit, which is where the press focus will likely be,” he said, adding that a Quad leaders’ summit was a possibility, the timing and location were difficult to pin down given that it was India’s turn to chair the Quad in 2025.
“Of course, Modi wants to bask in the reflected glory of chairing a summit with an American president on home soil. But it is not clear that he will be granted his wish – although it could happen,” he said. -- SOUTH CHINA MORNING POST
