Trump & Modi Announce US-India Trade Deal: Tariffs Reduced, Russian Oil Imports Halt

A new trade agreement between the United States and India was announced on Monday, February 2, 2026, following a phone conversation between US President Donald Trump and Indian Prime Minister Narendra Modi. The agreement centres on India halting purchases of Russian crude oil, a move directly linked by Trump to the new trade terms.

Key Terms of the Agreement

As part of the deal, the United States has immediately reduced its reciprocal tariff on Indian goods from 25 percent to 18 percent. India, in turn, is progressing towards eliminating tariffs and non-tariff barriers on US products. Trump stated that Modi requested the deal, and committed to increasing purchases of American products – including energy, technology, agriculture, coal, and more – to a value exceeding $500 billion.

Did You Know? The United States and India have been engaged in trade negotiations since March 2025.

Prime Minister Modi expressed his gratitude for the announcement, stating it would benefit the 1.4 billion people of India. He highlighted the importance of cooperation between the two large economies and the world’s largest democracies. Modi also praised Trump’s leadership and affirmed India’s support for his efforts towards global peace.

US Envoy Confirms Positive Relationship

The announcement followed a statement from US Ambassador to India, Sergio Gor, who indicated that a trade deal was imminent after Trump spoke with Modi. Gor emphasized the strong personal relationship between the two leaders and the limitless potential of the US-India partnership. His comments sparked online discussion regarding the anticipated trade agreement.

Expert Insight: This agreement represents a potential shift in India’s energy sourcing, aligning it more closely with the United States and potentially impacting geopolitical dynamics related to the conflict in Ukraine. The commitment to increased US purchases signals a strengthening of economic ties between the two nations.

The agreement comes ahead of a three-day visit to Washington by India’s External Affairs Minister S Jaishankar. Prior to the deal, Trump noted that India, along with other nations, had begun importing oil from Venezuela.

Frequently Asked Questions

What was the immediate change announced by President Trump?

President Trump announced an immediate reduction of the US reciprocal tariff on Indian goods from 25 percent to 18 percent.

What did Prime Minister Modi say about the agreement?

Prime Minister Modi thanked President Trump on behalf of the 1.4 billion people of India and stated that Made in India products would now have a reduced tariff of 18 percent.

What is the expected value of purchases from the US?

Prime Minister Modi committed to “BUY AMERICAN” at a higher level, including purchases worth more than $500 billion across US energy, technology, agriculture, coal, and other products.

How might this trade deal influence the broader geopolitical landscape?