India, US Strike 'Father Of All Deals', Tariff Down From 50% To 18%

In a late-night development, announced by the two governments, after a conversation between Prime Minister Narendra Modi and US President Donald Trump, India now has a lower tariff compared to competing export economies. Sources reported that tariffs on US exports to India have been reduced to zero. However, most agricultural products are likely to remain excluded.

Sources stated that the long-winded negotiations took a positive turn and ended punitive US tariffs, and provided for a better rate than competitors such as Vietnam and Bangladesh. Seen as a major diplomatic and economic win for the Modi government, Indian goods will now be taxed at a rate of India 18%, while other nations like Indonesia, 19%, Vietnam, 20%, Bangladesh, 20%, and China, 34%, are in a higher bracket.

The agreement comes after nearly a year of diplomatic strain, stalled talks, and market disruption. The worsening situation had adversely affected the rupee and equity indices, which were among the worst performers in emerging markets over the last few months. The repeated setbacks have been corrected with the latest deal being seen as a corrective step.

India had been facing increased tariffs since September 2025, including a 25% reciprocal levy and an additional 25% linked to oil trade with Russia.

The Announcement

Announcing the move, US President Trump posted on social media, "It was an Honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and, a Powerful and Respected Leader of his Country. We spoke about many things, including Trade, and ending the War with Russia and Ukraine. He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!"

"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%. They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO. The Prime Minister also committed to “BUY AMERICAN,” at a much higher level, in addition to over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products. Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that GET THINGS DONE, something that cannot be said for most. Thank you for your attention to this matter!," the President added.  

Responding to Trump's message, Prime Minister Modi stated, "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."

"When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation. President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights," Modi added.

How US Was Made To Blink

It is learnt that India bent the US by negotiating good trade deals with both the United Kingdom and the EU over the past few months. The White House is understood to have listened to the US MNCs to secure a deal with India.

Moreover, in a world facing demographic collapse, India successfully leveraged its position. It successfully presented a very large domestic consumption market and a large pool of young, educated, semi-skilled blue-collar workers, which can be an asset for the world.

Big Day For Made In India

Indian products are now expected to reach wider global markets, creating new possibilities for young entrepreneurs, farmers, and MSMEs. The 18% tariffs with the US and 0% tariffs with the EU are expected to make the Indian manufacturing sector exports extremely competitive. The only catch is that the Central and state governments are able to enhance manufacturing capacity.

Several senior leaders, including Union Cabinet Ministers, with whom The Secretariat had spoken earlier, had maintained that India's interests would be protected while negotiating a trade deal with the US.  

Industry Speak

Industry bodies indicated that the agreement could support a sustained recovery in exports in 2026. With tariff relief and policy clarity, companies expect stronger order inflows. Exporters are now preparing for increased demand from American buyers

"We congratulate the U.S. and Indian governments on their announcement to reduce tariffs and non-tariff barriers that will benefit American and Indian companies and workers in both great nations. We are optimistic that this is the first step toward a comprehensive trade agreement that will unlock even more private sector collaboration, and we look forward to reviewing the details of the deal," the US Chamber of Commerce said.

It was also pointed out, as an example, that the industry, like shrimp export, has received a big relief from the easing of tariffs. The current tariff was close to 58% (25% tariff + 25% Russia oil tariff + 8.25% anti dumping duty ). A tariff of 18% comes as a big relief for the sector.