The US has agreed to reduce reciprocal tariffs on Indian goods to 18% from 25% as part of the larger trade deal which will see India buy $500 billion worth of American goods.
The deal was announced by US President Donald Trump in a post on “Truth Social”.
“Out of friendship and respect for Prime Minister (Narendra) Modi and as per his request, effective immediately, we agreed to a trade deal between US and India whereby US will charge a reduced reciprocal tariff, lowering it from 25% to 18%.”
There was no mention of the additional 25% tariffs for buying crude oil from Russia but news agency IANS, quoting a White House official, said the additional tariffs will be removed. Trump also claimed that India has agreed to reduce tariff and non-tariff barriers against the US to zero.
Shortly after the announcement, PM Modi tweeted: 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.
“President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights,” he added.
India’s commitments to the trade deal
“The Prime Minister also committed to “BUY AMERICAN” at a much higher level, in addition to over $ 500 billion of US Energy, Technology, Agricultural and Coal and many other products,” Trump said.
According to Trump India has also agreed to stop buying Russian oil and buy much more from the US and potentially Venezuela. They will likewise move forward to reduce their barriers against the US to zero.”
Trump on the trade deal
“Our amazing relationship with India will be even stronger going forward,” Trump said while describing Modi as one of his greatest friends and a powerful and respected leader of his country.
Gift Nifty soared 600 points immediately after Trump’s announcement. Reacting to the development, Nilesh Shah, MD, Kotak Mahindra AMC said: India US trade deal has gone through ups and downs like a roller coaster. While devil is in the details, it removes a hanging sword over rupee, equity and rates market.
“Let us hope that it is a win win deal for both the countries as they have lot to gain through cooperation.” The buzz around the impending announcement of the trade deal gained ground as the US Ambassador to India Sergio Gor posted on ‘X’: “President Trump just spoke with Prime Minister Modi. Stay Tuned.’
The call followed two ‘Truth Social’ posts by President Trump, one sharing a magazine cover of him with Modi with the magazine calling as newsmakers of the year with a caption “The Mover and The Shaker” The other post was a photo of India Gate with a caption: “India’s beautiful triumphal arch, ours will be the greatest of them all!”