India to Buy More American Goods, Reduce Tariffs on U.S. Products

The United States and India have reached a trade agreement, with both countries agreeing to lower tariffs on each other’s goods, President Donald Trump announced on Monday.

Following a phone call with Indian Prime Minister Narendra Modi, Trump said India will also increase its purchases of American products, including energy, technology, agriculture, and coal. Modi reportedly agreed to “stop buying Russian oil” and instead source more energy from the United States and potentially Venezuela.

In a post on Truth Social, Trump stated:

“It was an honor to speak with Prime Minister Modi… We spoke about many things, including trade, and ending the war in Ukraine. He agreed to stop buying Russian oil and to buy much more from the United States. Effective immediately, we agreed to a trade deal between the United States and India, whereby the U.S. will reduce its reciprocal tariff from 25% to 18%. India will also reduce its tariffs and non-tariff barriers against U.S. goods to zero. Prime Minister Modi committed to buying American products at a much higher level, including over $500 billion of U.S. goods.”

Trump emphasized that the deal would take effect immediately, although the formal text of the agreement has not been released and it remains unclear whether it has been officially signed. Requests for comment from the White House and the U.S. Trade Representative’s office were not immediately answered.

Legal experts and some Democratic lawmakers have raised questions about whether Trump can implement binding trade agreements without congressional approval. Trump and his supporters maintain that the executive branch has broad authority to negotiate such deals.

Lori Mullins, director of operations at Rogers & Brown Custom Brokers, told CNBC that the industry typically waits for the official notice in the Federal Register before acting on trade announcements.

Trade negotiations between the U.S. and India had previously stalled over issues including India’s continued reliance on Russian oil. Last August, Trump imposed a 25% tariff on Indian goods in response to those oil purchases, adding to an existing 25% “reciprocal” U.S. levy. Under the new deal, the U.S. tariff will drop to 18%, while India will eliminate barriers to U.S. products.

Prime Minister Modi confirmed the tariff reduction on X (formerly Twitter), saying:

“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 announcement. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for cooperation. India fully supports his efforts for peace and looks forward to taking our partnership to unprecedented heights.”

The announcement comes one week after India finalized a major free trade agreement with the European Union, which Modi described as the “mother of all deals.” Analysts say the progress with Europe may have accelerated efforts between India and the United States.