US-India Trade Deal Sealed After Modi-Trump Call: 5 Key Changes That Happened Overnight

A major breakthrough in India–United States economic relations was announced following a telephone conversation between Prime Minister Narendra Modi and US President Donald Trump, resulting in the sealing of a long-pending trade deal. With both leaders taking to social media to outline the pact, the agreement is being characterised as a result of direct diplomacy and swift executive action rather than standard bureaucratic notifications. This fresh development marks a significant reset in bilateral ties, especially after months of tension over tariffs and trade imbalance.

Trump announced that under the new terms, the United States will lower reciprocal tariffs on Indian goods to 18 per cent from the previously higher rate, a move welcomed by Indian industry as it provides much-needed clarity after prolonged uncertainty. The revised tariff regime replaces punitive duties that had soared up to 50 per cent, which included a separate 25 per cent levy imposed on India’s purchase of Russian oil. India has publicly acknowledged the reduction in US tariffs, with PM Modi noting that “Made in India” products will now enjoy improved market access.

The trade agreement contains multiple elements that signal a departure from previous years of strained trade ties. First and foremost, the cut in tariffs to 18 per cent is effective immediately, offering Indian exporters clearer prospects for growth in critical markets such as textiles, engineering goods, and technology. This change restores some of the competitiveness that was eroded under the earlier elevated duties.

Secondly, the United States has agreed to drop the additional 25 per cent tariff linked to India’s purchase of Russian crude oil. Trump emphasised that Prime Minister Modi has committed to halting purchases of Russian oil and shifting energy imports toward the United States and other partners—a point Trump linked to broader geopolitical objectives related to the Russia–Ukraine conflict. However, there has been no official confirmation from New Delhi on specific commitments concerning Russian oil purchases.

A third notable aspect of the announcement is Trump’s claim that India will move toward zero tariffs and non-tariff barriers for US goods. In his post, Trump asserted that Indian tariffs on American products would be eliminated, though details on which sectors or timelines would apply remain unclear. This aspect, if realised, could unlock greater access for American agricultural, technological, and manufactured exports.

Fourth, the deal outlined by Trump includes a pledge—which he described as “over $500 billion worth” of Indian purchases of US energy, technology, agricultural, coal, and other products. This element of the agreement underscores an effort to rebalance trade flows and deepen commercial interdependence between the two countries, though precise implementations have yet to be delineated.

Finally, the announcement highlights a broader diplomatic movement, with industry bodies and trade forums in both countries welcoming the reset as a foundational step toward expanded cooperation. The US Chamber of Commerce and other entities described the tariff reduction as positive, while business leaders suggested that the pact could spur new investments and strategic alliances across sectors.

Despite the breadth of Trump’s outline, several critical details—such as implementation schedules, product-specific treatments, and reciprocal regulatory measures—remain pending formal documentation. Trade experts are awaiting further communications to understand how the proclaimed commitments will translate into actionable policy. Nevertheless, the immediate tariff cut and mutual assurances from both leaderships reflect a potentially transformative moment in India–US economic engagement.