President Donald Trump announced that the United States and India have agreed to a trade deal and will immediately move to lower tariffs on each other’s products.
In a post on Truth Social on Monday after a phone call with the Indian leader, President Trump said Prime Minister Narendra Modi had also agreed to buy American products at a “much higher level” as part of the deal.
Modi also promised to “stop buying Russian oil and buy more oil from the United States and possibly Venezuela,” Trump said in the post.
Read President Trump’s full announcement:
It was an honor to speak with Prime Minister Modi of India this morning. He is one of my great friends and a strong and respected leader of his country. We talked about trade, ending the war with Russia and Ukraine, and many other things. He agreed to stop buying Russian oil and buy more oil from the United States and possibly Venezuela. This will help end the ongoing war in Ukraine, where thousands of people are losing their lives every week. Out of friendship and respect for Prime Minister Modi, and at his request, we have agreed to a trade agreement between the United States and India, effective immediately, under which the United States will impose reduced tariffs, reducing reciprocal tariffs from 25% to 18%. Similarly, we will move forward to eliminate tariffs and non-tariff barriers to the United States. The Prime Minister also committed to BUY AMERICAN at a much higher level, in addition to more than $500 billion in U.S. energy, technology, agriculture, coal and many other products. Our excellent relationship with India will only grow stronger in the future. Prime Minister Modi and I are two people who get things done, which is something that most people cannot say. Thank you for your consideration in this matter.
President Trump’s announcement asserted that the agreement reached during the phone call would take effect without delay, but the text of the agreement has not yet taken shape and it is unclear whether anything has been signed. The White House and the Office of the U.S. Trade Representative did not immediately respond to CNBC’s requests for additional information.
Legal experts and some Democratic lawmakers have questioned whether President Trump could strike binding trade deals without Congressional approval, as he has done numerous times since taking office. Mr. Trump and his allies argue that Congress has ceded the power to secure such deals to the executive branch.
Lori Mullins, director of operations at Rogers & Brown Custom Brokers, told CNBC that the industry has learned not to react prematurely to President Trump’s public trade comments.
“It will become official once the date, time and applicable tariff code are published in the Federal Register,” Mullins said.
Trade talks between the Trump and Modi governments stalled last year amid a number of deadlocks, including New Delhi’s continued dependence on Russian oil.
In August, President Trump imposed an additional 25% tariff on India on these oil purchases, on top of a 25% “reciprocal” tax on Indian goods destined for the United States that went into effect earlier that month.
In a post on Monday, President Trump said the reciprocal tariff rate on India would be reduced to 18%, “effective immediately.”
India similarly “moves forward to reduce tariffs and non-tariff barriers to the United States to zero,” Trump wrote.
PM Modi acknowledged the US tariff cuts in a post on X late Monday.
“I am pleased that the tariffs on Indian-made products will be reduced to 18%. On behalf of the 1.4 billion people of India, I extend my deepest gratitude to President Trump for this wonderful announcement,” Prime Minister Modi wrote.
“Working together between two great economies and the world’s largest democracy benefits our people and presents immense opportunities for mutually beneficial cooperation. President Trump’s leadership is essential to peace, stability and prosperity in the world. India fully supports his efforts towards peace. I look forward to working closely with President Trump to take our partnership to unprecedented heights,” the Prime Minister said.
President Trump’s announcement comes a week after India signed a major free trade agreement with the European Union, which Prime Minister Modi touted as the “mother of all agreements.”
Some analysts predicted that developments between Europe and India could “ignite a fire” under New Delhi and Washington as they seek a bilateral deal.
—CNBC’s Lori Ann LaRocco contributed to this report.
