The United States and India have reached a tentative trade agreement that will see U.S. tariffs on Indian goods significantly reduced from 50% to 18%, a move expected to bring cost relief to American companies. The deal, announced by President Trump and Indian Prime Minister Narendra Modi on social media on February 2, 2026, marks a significant step toward resetting the partnership between the two nations after a year of deteriorating relations, according to a report from ASI.
According to statements from President Trump, the agreement was reached after India conceded to several key U.S. demands. These include ceasing the purchase of Russian oil, lowering its own trade barriers to zero, and increasing its purchases of goods from the United States and potentially Venezuela. Prime Minister Modi expressed his satisfaction with the new, lower tariff rate in a post on the social media platform X, where he thanked President Trump.
The business impact of this agreement is expected to be substantial for U.S. importers. The previous 50% tariff rate had placed a heavy burden on companies sourcing products such as apparel, jewelry, and electronics from India. The reduction to 18% is poised to ease those financial pressures and stabilize supply chains that had been strained by the trade friction. The agreement signals a potential de-escalation in a trade relationship that had grown increasingly tense, offering a new path forward for economic cooperation between the two global powers.
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