Trump plans to lower tariffs on Indian goods to 18% after India agreed to stop buying Russian oil

President Trump announced plans Monday to reduce tariffs on Indian goods from 25% to 18% following Indian Prime Minister Narendra Modi’s agreement to stop purchasing Russian oil, a move aimed at pressuring Moscow economically as the Ukraine war continues.

The agreement marks a significant shift in India’s energy policy, as the country has been taking advantage of discounted Russian crude since Russia’s February 2022 invasion of Ukraine. According to Trump’s announcement on Truth Social, India will also eliminate import taxes on U.S. goods and commit to purchasing $500 billion worth of American products.

“This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!” Trump declared in his social media post.

Modi responded positively on X, stating he was “delighted” by the tariff reduction and praising Trump’s leadership as “vital for global peace, stability, and prosperity.” The Indian leader added that he looks forward to strengthening bilateral relations to “unprecedented heights.”

The announcement comes at a pivotal moment in U.S.-India relations. Trump initially imposed a 25% tariff on Indian goods in June after his administration determined India had not done enough to reduce its trade surplus with the United States or open its markets to American products. In August, he added another 25% tariff specifically targeting India’s Russian oil purchases, bringing the total to 50%.

The new 18% rate would position Indian goods closer to the 15% tariff rate applied to products from the European Union, Japan, and other nations, potentially restoring India’s competitive position in the American market.

Historically, India’s relationship with Russia has centered more on defense than energy, with Russia providing most of India’s military hardware but traditionally only a small fraction of its oil. However, following the Russian invasion of Ukraine, India significantly increased its purchases of discounted Russian crude, boosting its energy supplies while providing Russia with much-needed revenue for its war effort.

Trump has consistently argued that targeting Russia’s oil revenue represents the most effective strategy to pressure Moscow into ending the nearly four-year war in Ukraine. This approach aligns with his broader preference for using tariffs as a tool of economic diplomacy.

The deal comes just days after India and the European Union reached a comprehensive free trade agreement affecting nearly 2 billion people. That arrangement, which concluded after almost two decades of negotiations, will enable free trade on almost all goods between the EU’s 27 members and India, covering sectors from textiles to medicines and reducing high import taxes on European wine and automobiles.

The EU-India agreement reflected a growing global desire to reduce economic dependence on the United States following Trump’s disruptive tariff policies. India has also recently accelerated efforts to finalize several other trade agreements, signing a deal with Oman in December and concluding negotiations with New Zealand.

As part of the diplomatic efforts surrounding the Ukraine conflict, Trump’s special envoy Steve Witkoff and son-in-law Jared Kushner are expected to hold another round of three-way talks with Russian and Ukrainian officials in Abu Dhabi later this week, according to White House sources. These discussions aim to explore potential pathways to end the conflict.

Trade relations between the U.S. and India remain complex. The Census Bureau reported that the U.S. had a $53.5 billion trade deficit in goods with India during the first 11 months of last year. While the U.S. has sought greater market access and zero tariffs on nearly all its exports, India has expressed reservations about opening certain sectors like agriculture and dairy, which employ a significant portion of its 1.4 billion population.

For American policymakers and business leaders, India represents a crucial geopolitical and economic counterweight to China, making the development of stronger bilateral trade relations a strategic priority beyond immediate economic considerations.