Trump and Modi Announce Trade Deal Cutting Tariffs, India to Halt Russian Oil Purchases

U.S. President Donald Trump and Indian Prime Minister Narendra Modi announced a bilateral trade agreement on Feb. 2, 2026, under which the United States will reduce tariffs on Indian products and India has agreed to halt purchases of Russian oil, officials said. The announcement came after a phone call between the two leaders and represents a significant shift in relations between the world’s two largest democracies.

Under the deal, Washington will lower its reciprocal tariffs on Indian goods to 18 per cent — down from rates that had climbed to 50 per cent following punitive measures tied to India’s oil trade with Russia. Trump framed the tariff reduction as both a gesture of “friendship and respect” toward Modi and an effort to encourage New Delhi to alter its energy sourcing.

The agreement also includes commitments from India to eliminate tariff and non-tariff barriers on U.S. imports in many sectors and to significantly increase purchases of American goods, especially in energy, agriculture, technology and industrial products. Trump touted plans for India to buy U.S. energy supplies and possibly oil from Venezuela as part of the expanded trade cooperation.

Modi confirmed on social media that tariffs on “Made in India” products entering the U.S. will now be reduced to 18 per cent, a move welcomed by Indian business leaders and stock markets, which saw gains after the announcement. The deal is expected to improve market access for Indian exporters and strengthen bilateral commercial ties.

The tariff reduction follows months of trade tensions between the countries, which began in 2025 when the Trump administration imposed escalating duties — first as a 25 per cent “reciprocal” tariff and later a punitive surcharge tied to India’s continued imports of Russian crude. Those measures pushed total tariffs on Indian goods to among the highest of any U.S. trading partner.

By linking tariff relief to India’s oil purchasing decisions, the deal also serves a geopolitical purpose: reducing New Delhi’s reliance on discounted Russian oil amid Western efforts to isolate the Russian economy over its ongoing invasion of Ukraine. India had become one of the largest buyers of Russian crude, a point of contention in U.S.–India relations throughout 2025.

Officials have yet to release full details on the exact timeline for tariff changes, the specific products affected, and how India will manage its energy transition away from Russian supplies. Both sides, however, described the agreement as a milestone in strengthening economic and strategic cooperation between the two democratic powers.