India-US Trade Deal: Trump Announces Tariff Reduction to 18%, Modi Responds with Thanks
In a significant development for international trade, US President Donald Trump declared on Monday, 2 February 2026, that the United States and India have reached a long-awaited trade agreement. As part of this deal, the US is implementing an immediate reduction in import tariffs on Indian goods, lowering them from 25% to 18%. This announcement was made via Trump's post on Truth Social, where he emphasized the move as a gesture of friendship towards Indian Prime Minister Narendra Modi.
Details of the Trade Agreement and Tariff Changes
Trump stated that the decision to cut reciprocal tariffs was made in response to a request from Prime Minister Modi. He highlighted that this reduction applies to all Indian imports into the United States, effective immediately. The President framed this as a mutual benefit, aiming to strengthen trade ties between the two nations. However, it is important to note that while Trump has publicly confirmed the deal, Indian authorities have not issued an official bilateral trade announcement. The only response from India so far has been Prime Minister Modi's late-night post on platform X, expressing gratitude for the tariff cut.
Prime Minister Modi's Reaction and Implications for India
Prime Minister Narendra Modi thanked President Trump on behalf of India's 1.4 billion people, describing the tariff reduction as a wonderful announcement. He noted that this move will particularly benefit Made-in-India products, making them more competitive in the US market. Modi's response underscores the positive impact this deal could have on Indian exports, which have faced additional tariffs since 2025. Experts suggest that this agreement positions India favorably in global trade, especially as supply chains shift away from China.
India-US Trade Relations: Key Statistics and Expert Insights
According to data from the Ministry of Commerce and Industry, the United States is India's largest export market, accounting for approximately 13.34% of India's total exports. The India Brand Equity Foundation (IBEF) reports that bilateral trade between the two countries reached a record $132.2 billion in the financial year 2024-25. Rudra Kumar Pandey, Partner at Shardul Amarchand Mangaldas & Co., commented that this trade deal reinforces India's export-competitive posture. He linked it to recent customs duty rationalization efforts and the broader trend of US supply-chain recalibration, which is moving away from reliance on China.
What This Trade Deal Means for the Future
The announcement marks a pivotal moment in India-US economic relations, potentially boosting Indian exports and fostering closer bilateral ties. While the deal has been announced by the US, further details and official confirmations from Indian authorities are awaited. This development is expected to have ripple effects across various sectors, including manufacturing and trade, as India leverages its enhanced access to the US market. Stakeholders will be closely monitoring subsequent negotiations and implementations to assess the long-term benefits for both nations.
