FILE PHOTO: U.S. President Donald Trump and Indian Prime Minister Narendra Modi shake hands as they attend a joint press conference at the White House in Washington, D.C., U.S., February 13, 2025. REUTERS/Kevin Lamarque/File Photo
WASHINGTON/NEW DELHI, Feb 2 (Reuters) - U.S. President Donald Trump on Monday said he had agreed on a trade deal with India that slashes U.S. tariffs on Indian goods to 18% from 50% in exchange for India lowering trade barriers, stopping its purchases of Russian oil and buying oil instead from the U.S. and potentially Venezuela.
"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% to 18%," Trump said in a social media post following a call with Indian Prime Minister Narendra Modi.
A White House official told Reuters that the U.S. was rescinding a punitive, 25% duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25% "reciprocal" tariff rate.
U.S.-listed shares of major Indian companies rallied on the news. IT consulting firm Infosys was up 3.53% in afternoon trading, consultancy Wipro rose 7% , HDFC Bank gained 3.4% and the iShares MSCI India exchange-traded fund rallied 3.3%.
Modi also committed India to "BUY AMERICAN at a much higher level," in addition to buying more than $500 billion worth of U.S. energy, including coal, along with technology, agricultural and other products, Trump added.
"They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO," Trump said of India.
Until Trump returned to office and raised U.S. tariff rates to double-digit levels last year, India had some of the world's highest tariffs, with a simple applied rate of 15.6% and an effective applied tariff of 8.2%, according to World Trade Organization data.
FEW DETAILS AVAILABLE
Trump's Truth Social message provided few details, including on the start date for the tariff reductions, the trade barrier reductions and which U.S. products India had committed to purchasing.
Previous trade deals with other major Asian trading partners including Japan and South Korea have included commitments to invest hundreds of billions of dollars into U.S. industries, but the India announcement did not mention any specific investments.
A White House spokesperson did not immediately respond to a request for more details. India's trade and foreign affairs ministries did not respond to a request for comment sent after office hours in New Delhi.
The deal brings India "broadly in line with its Asian peers on tariff rates," of 15-19%, said Madhavi Arora, economist at Emkay Global, adding that it would eliminate a disproportionate drag on India's exports and its rupee currency.
Indian markets had been battered since the tariffs were levied by Washington, making it the worst-performing market among emerging nations in 2025, with record outflows of foreign investors.
'BIG THANKS' FROM MODI
"Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%," Modi said in a social media post on X. "Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement."
India's Trade Minister Piyush Goyal said the deal would draw the U.S. and Indian economies closer together.
"This agreement unlocks unprecedented opportunities for farmers, MSMEs, entrepreneurs, and skilled workers to Make in India for the world, Design in India for the world, and Innovate in India for the world. It will help India get technology from the U.S.," Goyal said in a post on X.
The deal comes less than a week after India signed a long-awaited trade deal with the European Union that is expected to eliminate or reduce tariffs on 96.6% of traded goods by value. That deal excludes EU soybeans, beef, sugar, rice and dairy from tariff reductions.
WESTERN HEMISPHERE OIL
On Saturday, Trump teased a potential deal for India to buy Venezuelan oil after the U.S. seized Venezuelan President Nicolas Maduro in a military raid in early January.
The deal followed months of tense trade negotiations between the world's two largest democracies.
Last August, Trump doubled duties on imports from India to 50% to pressure New Delhi to stop buying Russian oil, and earlier this month said the rate could rise again if it did not curb its purchases.
Purchases of Venezuelan oil would help replace some of the Russian oil bought byIndia, the world's third-biggest oil importer.
India relies heavily on oil imports, covering around 90% of its needs, and importing cheaper Russian oil has helped lower its import costs since Moscow invaded Ukraine in 2022 and western nations slapped sanctions on its energy exports.
Recently India has begunto slow its purchases from Russia. In January, they were around 1.2 million barrels per day, and are projected to decline to about 1 million bpd in February and 800,000 bpd in March, according to a Reuters report.
(Reporting by Bhargav Acharya in Toronto, David Lawder and Andrea Shalal in Washington and Aftab Ahmed in New Delhi; writing by David Lawder and Susan Heavey; Editing by Doina Chiacu, Michelle Nichols and David Gregorio)
