U.S. and India Strike Trade Deal to Slash Tariffs, Ease Tensions

This analysis was originally reported by Supply Chain Dive. For daily insights on logistics and trade, subscribe to our free newsletter.

In a move signaling a potential de-escalation of trade tensions, former President Donald Trump announced Monday that the U.S. has finalized a trade agreement with India. The deal centers on a mutual reduction of import duties.

Trump, posting on his Truth Social platform, stated the U.S. would cut its country-specific tariff on Indian goods from 25% to 18%. A White House spokesperson confirmed to Supply Chain Dive that the agreement also includes the removal of an additional 25% tariff—imposed last year—targeting India for its purchases of Russian oil. Official documentation of the pact had not been released by the White House at the time of publication.

According to Trump's announcement, Indian Prime Minister Narendra Modi committed to eliminating tariffs and non-tariff barriers on U.S. imports. In a significant geopolitical shift, India also agreed to halt oil purchases from Russia while committing to buy over $500 billion in U.S. energy, technology, agriculture, and coal products.

Trade analysts see the announcement as a major strategic development. "The market has been anticipating a downward adjustment on tariffs for Indian imports for some time," said Pete Mento, Director of Global Trade Advisory Services at Baker Tilly. He urged caution, however, noting that "the real test lies in implementation. We'll need to see the final legal texts and regulatory mechanics from both governments to understand the full scope."

This potential deal with India follows a pattern of U.S. trade negotiations over the past year, driven by the previous administration's reciprocal tariff policy. Similar framework agreements have been discussed with the European Union, Japan, and South Korea. Yet, the durability of such pacts remains uncertain. Earlier this year, the EU temporarily suspended its tariff agreement with the U.S. following threats of new levies, and the U.S.-South Korea framework is currently under strain.

The India agreement, if fully realized, could reshape supply chains and diplomatic alignments, particularly by drawing New Delhi further from Russian energy dependence and toward U.S. markets.

Reaction & Analysis

Anya Sharma, Trade Policy Analyst at the Delhi Institute of Economic Studies: "This is a pragmatic, if overdue, correction. Lower tariffs will boost competitiveness for Indian manufacturers in the U.S. market, particularly in textiles and pharmaceuticals. The energy purchase commitment is substantial and signals a long-term strategic realignment."

Mark Richardson, Former U.S. Trade Negotiator: "The devil is in the details, which we haven't seen. The $500 billion purchase figure sounds more like a political headline than a enforceable contract. We need clarity on timelines and product specifications. The removal of the Russia oil tariff is a clear geopolitical win, though."

James "Jim" Kellerman, Small Business Owner (Auto Parts Importer), Cleveland, OH: "Finally! For years, these punishing tariffs made it impossible to source quality components from India competitively. This rollback can't come soon enough. It's a direct boost to my bottom line and will help keep prices stable for my customers."

Linda Chen, Advocacy Director, 'Fair Trade Alliance': "This is a terrible precedent. It rewards India for years of unfair trade practices and non-tariff barriers, and the massive purchase commitment looks like a coerced, politically-driven transaction. We're essentially weaponizing trade policy, and American workers in competing sectors will lose out. What about the promises to bring manufacturing home?"