Trump & Modi Announce Trade Deal: Lower Tariffs & Halt to Russian Oil Purchases

Washington — A trade deal between the United States and India, coupled with an agreement regarding Russian oil purchases, was announced Monday by President Trump. The deal will lower tariffs on Indian products entering the U.S. To 18% and aims to significantly reduce India’s reliance on Russian oil, according to a post on Truth Social.

President Trump stated that Indian Prime Minister Narendra Modi committed to increasing purchases of American products, potentially exceeding $500 billion in U.S. Energy, technology, agriculture, coal, and other goods. He specifically mentioned increased oil purchases from the U.S. And “potentially” Venezuela. “He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” Trump wrote. As part of the agreement, the U.S. Will reduce its reciprocal tariff on Indian goods from 25% to 18%, with India expected to reciprocate by reducing its own tariffs and non-tariff barriers against the U.S. To zero.

The announcement follows a period of tension stemming from U.S. Tariffs imposed on Indian products last year, reaching as high as 50%, in an effort to discourage India’s purchases of Russian oil. India has been a major customer of Russian crude oil, a situation that strained the U.S.-India relationship amid the ongoing war in Ukraine.

Prime Minister Modi confirmed the reduced tariff rate on X, expressing enthusiasm for increased trade. “Delighted that Made in India products will now have a reduced tariff of 18%,” Modi wrote. “Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.”

The agreement comes after India struck a landmark trade agreement with the European Union last week, a development some observers have suggested was spurred by the U.S.’s trade policies.

Prior to Monday’s announcement, President Trump had repeatedly targeted India over its Russian oil purchases. In October 2025, he stated that Modi had “assured” him India would halt its purchases “within a short period of time,” calling it “a big stop” to Russia’s funding of the war in Ukraine. However, at that time, there was no immediate confirmation from Delhi. Trump also vowed to maintain “massive” tariffs on India if it continued to import Russian oil, a position he reiterated on October 20, 2025.

In January 2026, Modi’s envoy reportedly urged Trump to ease tariffs, while indicating that India was already buying less Russian oil. Trump, however, indicated on January 7, 2026, that Modi was unhappy with the high U.S. Tariffs. The Indian Ambassador reportedly discussed easing tariffs with Trump approximately a month prior to that date.

The U.S. Imposed a 50% tariff on India in August 2025 as a punitive measure for its continued purchases of Russian oil, with some experts suggesting the move was counterproductive.

The situation evolved throughout late 2025 and early 2026, with ongoing discussions between the two administrations. The U.S. Administration had previously “shown interest in deepening energy co-operation with India,” according to an Indian government spokesman, while maintaining that India’s import policies were guided by the need to “safeguard the interests of the Indian consumer in a volatile energy scenario.”