In a landmark diplomatic breakthrough, former U.S. President Donald Trump and Indian Prime Minister Narendra Modi have orchestrated a comprehensive trade agreement that fundamentally reshapes economic relations between the world’s largest democracies. The arrangement, announced through Trump’s Truth Social platform, commits India to purchasing over $500 billion in American goods across energy, technology, agriculture, and coal sectors.
The agreement eliminates the contentious 25% tariff penalty previously imposed on India for its Russian oil purchases, with the overall tariff rate on Indian goods reduced to 18% from the previous 50% peak. In return, India has committed to eliminating all trade barriers against U.S. products and will cease purchasing Russian oil, redirecting its energy procurement to American suppliers and potentially Venezuelan sources.
This development follows closely after India’s separate trade agreement with the European Union, concluded after nearly twenty years of intermittent negotiations. Both leaders emphasized the strategic importance of the pact, with Modi expressing delight at the outcome and Trump suggesting the economic cooperation could contribute to resolving the Russia-Ukraine conflict.
The White House confirmed the tariff adjustments to the BBC, noting the Russian oil-linked tariffs would be dropped entirely as part of the comprehensive agreement. The deal marks a dramatic reversal from August, when U.S. tariffs on Indian goods reached 50% – the highest rate imposed on any Asian nation – causing Indian exports to the U.S. to plummet dramatically.
Prime Modi acknowledged the agreement on social media platform X, thanking Trump ‘on behalf of the 1.4 billion people of India’ and highlighting the immense opportunities created when major economies and democracies collaborate effectively.