New Trade Terms Between the U.S. and India
President Donald Trump said Monday that tariffs on Indian goods will drop from 25% to 18%, following talks with Prime Minister Narendra Modi. Trump also announced that India plans to gradually remove import taxes on U.S. products and commit to buying $500 billion worth of American goods. Modi described the tariff reduction as “delightful” and praised Trump’s leadership, though he did not confirm any changes regarding Russian oil imports.
The Russia-Ukraine Factor
The U.S. has long pressured India to reduce its reliance on discounted Russian oil, which has continued to flow to India despite international sanctions following Moscow’s 2022 invasion of Ukraine. Trump has argued that cutting Russia’s oil revenue is key to ending the war, though his promises to resolve the conflict quickly remain unfulfilled. Talks in Abu Dhabi later this week, involving Trump’s special envoy Steve Witkoff and Jared Kushner, aim to explore a potential endgame.
Broader Trade Context
Trump first imposed tariffs on Indian goods earlier this year, citing trade imbalances and India’s Russian oil purchases, with rates briefly reaching 50%. The new reduction to 18% brings Indian products closer to U.S. tariffs on EU and Japanese goods. The announcement follows India’s recent free trade agreement with the European Union, which covers nearly all goods and affects around 2 billion people. India has also recently advanced deals with Oman and New Zealand, signaling a broader strategy to expand trade while balancing global pressures.
