New Trade Terms Announced
President Donald Trump said Monday that tariffs on Indian goods will drop from 25% to 18%, following discussions with Prime Minister Narendra Modi. Trump added that India plans to gradually eliminate import taxes on U.S. products and purchase $500 billion worth of American goods. Modi described the move as “delightful” and praised Trump’s “leadership” while highlighting a productive phone call, though he did not confirm any changes to India’s Russian oil imports.
The Russia-Ukraine Factor
Trump has long criticized India for continuing to buy Russian oil, which the U.S. says helps fund Moscow’s invasion of Ukraine. India has relied on discounted Russian crude since the war began in February 2022, making up nearly 36% of its total crude imports in 2024. Trump maintains that targeting Russia’s oil revenue is key to ending the conflict, a strategy linked to his broader use of tariffs. Special envoys, including Jared Kushner and Steve Witkoff, are expected to resume three-way talks with Russian and Ukrainian officials in Abu Dhabi this week.
Broader Trade Context
Trump first imposed tariffs of 25% on Indian goods in June, increasing them to 50% in August due to India’s Russian oil purchases and trade imbalance concerns. With the new agreement, the rate will fall to 18%, closer to the 15% applied to European and Japanese imports. The announcement comes shortly after India finalized a free trade deal with the European Union, covering nearly all goods between India and the EU’s 27 members, and amid other deals with Oman and New Zealand as India seeks to diversify its trade partnerships.
