President Donald Trump announced on Monday that the United States and India reached a trade agreement, which will lower the tariff rate on goods coming into the U.S. to 18 percent.
In exchange, Indian Prime Minister Narendra Modi has agreed that his country will stop buying Russian oil and will make a $500 billion investment in various U.S. industries and products.
CNN reported that the 18 percent tariff is down from 50 percent, which had included a 25 percent reciprocal tariff that Trump put in place in August to encourage India to stop buying Russian oil.
“It was an Honor to speak with Prime Minister Modi, of India, this morning,” Trump posted Monday on Truth Social. “He is one of my greatest friends and, a Powerful and Respected Leader of his Country. We spoke about many things, including Trade, and ending the War with Russia and Ukraine. He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela.”
The president argued that taking oil revenue away from Moscow will help end the Russia-Ukraine war sooner.
Trump continued, “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%.”
“They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO. The Prime Minister also committed to ‘BUY AMERICAN,’ at a much higher level, in addition to over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products,” the president wrote.
Donald J. Trump Truth Social Post 11:58 AM EST 02.02.26 pic.twitter.com/HKTag9ZujW
— Commentary Donald J. Trump Posts From Truth Social (@TrumpDailyPosts) February 2, 2026
Modi responded to Trump’s decision, “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President 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,” the prime minister added.
“President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace,” Modi said.
Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.
When two large economies and the…
— Narendra Modi (@narendramodi) February 2, 2026
CNN reported that India has been the second largest purchaser of Russian oil behind China, with Turkey a distant third.
In December 2025, China purchased 47 percent of Russia’s oil exports compared to India’s 38 percent. Turkey and the European Union bought at 6 percent each, according to the Center for Research on Energy and Clean Air.
There is a trade imbalance between the U.S. and India: the U.S. imported $95.5 billion in goods from India and exported $42 billion to India in 2025 as of November, according to the Census Bureau.
CNN noted, “Among the top goods the US imported from India last year are computers and other electronics, such as phones, pharmaceuticals, apparel and chemicals. Jewelry prices in the United States have risen in recent months in part because of tariffs on India. Meanwhile, India’s top imports from the US were oil, gas, airplanes and airplane parts.”
Amy Hariani, an international trade lawyer and adviser on U.S.–India commercial relations, said in an e-mail to Politico regarding the agreement, “The tariff reduction from 25% to 18% matters, but the bigger story is that two major democracies worked through real differences and chose economic alignment in a complex geopolitical environment.”
She added, “Credit is due to President Trump and Prime Minister Modi for providing political direction, and to officials like [U.S. Trade Representative] Jamieson Greer and their teams who tirelessly saw this through.”
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