US-India agreement, tariffs reduced to 18%. Trump: 'Modi will no longer buy Russian oil'

"When two great economies and the world's largest democracies work together, it benefits our peoples and opens up tremendous opportunities for mutually beneficial cooperation," continued Modi, who then praised the US president for his diplomatic skills.

"President Trump's leadership is critical to global peace, stability and prosperity. India fully supports his peace efforts," Modi wrote, adding that "I look forward to working closely with him to take our partnership to unprecedented heights."

Trump - in June 2025 - had announced that the US would impose 25 per cent tariffs on goods from India after his administration had deemed that the country had done 'too little' to reduce its trade surplus with the US and to open its markets to American products. In August, Trump had further increased tariffs on Indian products, raising the overall rate to 50 per cent and justifying the decision as a response to New Delhi's purchase of Russian oil.

Historically - as the Associated Press recalls - India's relationship with Russia revolves more around defence than energy. Russia supplies only a small part of India's oil, but most of its military equipment.

However, India, in the aftermath of the Russian invasion of Ukraine, took advantage of the moment to buy Russian oil at a discount. Moscow, for its part, thanks to New Delhi, found a way to give a breather to its economy, which was under stress due to the war effort and European countermeasures in defence of Kiev.

The announcement of reduced US tariffs on Indian goods comes just days after India and the European Union - after almost two decades of negotiations - reached a free trade agreement that could affect up to 2 billion people. The agreement would allow free trade on almost all goods between the 27 EU member states and India: covering everything from textiles to medicines, and reducing high import taxes on European wine and cars.

Today's announcement comes as Washington is targeting both the Asian powerhouse and the EU bloc with high import tariffs, disrupting established trade flows and pushing major economies to seek alternative partnerships.

In recent months, India has accelerated its efforts to finalise several trade agreements. In December, it signed an agreement with Oman and concluded talks on an agreement with New Zealand.

The US Census Boureau reported that in the first 11 months of last year, the US recorded a trade deficit of USD 53.5 billion in goods trade with India, meaning that it imported more than it exported.

With a population of over 1.4 billion people, India is the most populous country in the world and is considered by many government officials and business leaders to be a geopolitical and economic counterweight to China.