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Donald Trump said the US would lower its tariffs on India to 18 per cent after Prime Minister Narendra Modi “agreed” to halt purchases of Russian oil, ending months of trade friction between the countries. 

The president said he spoke with Modi on Monday and had discussed “many things”, including trade, ending the war in Ukraine and the possibility of India buying more oil from the US and even Venezuela.

“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%,” Trump said in a Truth Social post on Monday.

Trump has accused India, which imports about 90 per cent of its crude oil, of helping fund Moscow’s war machine in Ukraine. In August, he slapped a 25 per cent punitive levy on India over its purchases of Russian oil on top of the 25 per cent “reciprocal” tariff, raising total duties to 50 per cent — among the highest levels in the world.

On Monday, US officials, including Washington’s new ambassador to New Delhi, Sergio Gor, indicated that since India had agreed to stop buying Russian oil, the punitive 25 per cent levies would be removed, bringing down the overall tariffs on the country from 50 to 18 per cent.

Long-running trade talks that started last year stumbled after Trump imposed the extra oil-related duties, dealing a blow to the world’s fastest-growing large economy and deepening a rift between Washington and New Delhi.

The deadlock soured ties between Trump and Modi, who the US president has referred to in the past as a “great friend”.

The president said on Monday that India would reduce its “Tariffs and Non Tariff Barriers” on the US to zero, while also committing to a “Buy American” policy worth “over $500 BILLION DOLLARS” of American goods, including energy, technology and agricultural products.

“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,” Modi posted on X soon after Trump’s announcement.

Analysts were sceptical that India would buy as much from the US as Trump claimed, given that total bilateral trade between the countries amounted to $212bn in 2024.

India bought just $41.5bn worth of goods from the US last year, he said, “so there’s no way it’s going up to $500bn, particularly when Trump is only talking about goods trade”, said Pratik Dattani, founder of the Bridge India think-tank.

He added that while India had already started to reduce oil purchases from Russia, they were unlikely to be eliminated entirely, given the country’s relationship with Moscow. India had become the biggest buyer of cheap seaborne Russian crude since the full-scale war in Ukraine started in 2022.

Nicolas Köhler-Suzuki, adviser for trade and economic security at the Jacques Delors Institute in Paris, said Trump’s claim that India had agreed to work towards reducing all tariffs to “ZERO” was unlikely in the extreme.

“It seems highly doubtful that India has agreed to reduce tariffs to zero, particularly on agricultural goods, given India’s long-standing approach to trade negotiations going right back to the Doha Round,” he said, referring to World Trade Organization talks launched earlier this century.

The conclusion of a deal between the EU and India last month, following a similar agreement between India and the UK, was likely to have added pressure on Trump to cut a deal with New Delhi.

Trump said in his post that Modi had agreed to stop buying Russian oil — a bone of contention for Washington — and would instead “buy much more” from the US “and, potentially, Venezuela”.

“One must be cautious in the absence of deal text, but the word ‘potentially’ could end up doing a lot of work,” said Kevin Book at consultancy ClearView Energy Partners.

Since the imposition of US tariffs in August, employment-intensive sectors such as gems, textiles and shrimp bore the brunt of India’s pain. 

However, some of India’s most important export industries had been exempt from Trump’s tariffs, including pharmaceuticals — which account for almost half of US generic drug supplies, according to the Indian Pharmaceutical Alliance — and consumer electronics.

While India is not a top global exporter, it has among the highest trade deficits in goods with the US, having reached more than $45bn in 2024. It historically has had high average tariff levels of its own in order to protect domestic industries, a policy that rankled the Trump administration.

“The deal is anticipated to provide notable tariff relief for New Delhi and represents a key achievement for the Trump administration’s trade diplomacy,” said Basant Sanghera, managing principal at the Asia Group.

“The deal will also inject much-needed momentum in the wider bilateral partnership after months of headwinds. India’s patience has paid off — for now,” he added.