US Cuts Tariffs on Indian Goods to 18% After Modi-Trump Talks

The United States has agreed to significantly reduce tariffs on Indian goods, cutting the rate to 18% from a steep 50%, marking a major breakthrough in trade relations between the two countries. The decision follows direct talks between US President Donald Trump and Indian Prime Minister Narendra Modi, bringing relief to Indian exporters who had been struggling under punitive duties.

The tariff reduction comes after months of strained trade negotiations. Last year, the US had imposed a combined 50% tariff on Indian imports, including a punitive levy linked to India’s continued purchases of Russian oil and a reciprocal tariff component. The move had hit several Indian industries hard, as the US remains one of India’s most important export markets.

According to the US administration, the revised tariff structure reflects a broader understanding between the two nations aimed at de-escalating trade tensions. President Trump said the decision was taken following discussions with Prime Minister Modi and described it as a step taken out of mutual respect and strategic partnership. The revised rate is effective immediately, offering quick relief to Indian businesses.

Prime Minister Modi welcomed the announcement, stating that the reduced tariff would help Made in India products compete better in the US market. He also underlined the importance of strong economic ties between the world’s two largest democracies and thanked the US leadership for the decision.

The agreement also includes India’s commitment to increase purchases of US-origin goods across sectors such as energy, technology and agriculture. Analysts say the 18% tariff places Indian exports closer to rates faced by several Southeast Asian economies, potentially restoring competitiveness lost over the past year.

However, trade experts caution that the announcement appears to be more of a tariff adjustment than a full-fledged trade agreement. Key details on long-term market access and reciprocal tariff reductions are yet to be clarified.

Despite the uncertainty, the move is being viewed as an important confidence booster for Indian markets, which had seen sustained foreign investor outflows following the tariff hikes. The decision also comes close on the heels of India’s free trade agreement with the European Union, signalling a renewed push towards stabilising and expanding global trade partnerships.