TradeDeal – US and India Seal Tariff Pact, Signaling Reset in Bilateral Ties
TradeDeal – The announcement of a new trade understanding between the United States and India has been described by analysts as a major step forward after months of strained engagement between the two countries.
The agreement, which lowers US tariffs on Indian goods to 18 percent, has drawn attention for both its economic implications and its broader diplomatic impact. According to South Asia analyst Michael Kugelman, the deal represents the most positive development in US-India relations in nearly a year and serves as a meaningful confidence-building measure after a prolonged period of uncertainty.
A Deal Nearly a Year in the Making
Speaking after the announcement, Kugelman noted that the agreement follows almost a year of stalled expectations. He recalled that US President Donald Trump and Prime Minister Narendra Modi had pledged to pursue a trade pact during Modi’s visit to the White House last year. However, several rounds of negotiations failed to produce results, while disagreements over tariffs and energy trade placed additional strain on the relationship.
Against that backdrop, the finalization of a deal now carries added significance. Kugelman said the agreement not only closes a long-running chapter of negotiations but also helps restore momentum to a partnership that had shown signs of drifting off course.
Confidence Boost Amid Recent Tensions
The analyst described the tariff reduction as a clear signal of renewed cooperation. In his assessment, the agreement could make it easier for both governments to address other unresolved issues that have weighed on bilateral ties. While trade discussions had repeatedly stalled in recent months, the breakthrough suggests a willingness on both sides to compromise and move forward.
Kugelman emphasized that even a limited deal can have an outsized diplomatic impact, especially after a period when expectations for progress had been low.
Key Details Still Awaited
Despite welcoming the development, Kugelman cautioned that important elements of the agreement remain unclear. He said there is still limited public information about the specific commitments made by each side, particularly in sensitive areas such as energy imports and market access.
One unresolved issue is whether India has agreed to make changes in politically sensitive sectors, including agriculture. Kugelman noted that such decisions often face strong domestic resistance, making them difficult to implement quickly.
Questions Over Russian Oil and Tariffs
Energy trade remains another area of uncertainty. While India has reduced its imports of Russian oil in recent months, Kugelman said it is unrealistic to expect an immediate and complete halt without clearer terms. He pointed out that recent reductions followed new US sanctions on Russia, but the long-term direction of India’s energy purchases is still not fully defined.
There are also unanswered questions about the fate of the additional 25 percent tariff imposed by the US over India’s Russian oil imports. While the main tariff rate has been lowered to 18 percent, Kugelman said it is not yet clear whether all penalty tariffs will be fully removed.
Trump’s Announcement and Claims
Earlier on Monday, President Trump publicly confirmed the trade agreement, saying the tariff reduction was made out of friendship and respect for Prime Minister Modi. In a social media post, he said the two leaders discussed trade and global security issues, including the conflict between Russia and Ukraine.
Trump also claimed that India had agreed to stop purchasing Russian oil and increase imports from the United States, while reducing both tariff and non-tariff barriers on American goods. These assertions have drawn attention, as official details of the agreement have not yet been fully released.
India Welcomes Tariff Relief
Prime Minister Modi responded positively to the announcement, saying he was pleased that Indian-made products would now face lower tariffs in the US market. In a public message, he thanked President Trump and described the development as beneficial for Indian exporters and manufacturers.
White House Clarification
Following the initial announcements, a White House official confirmed that Washington plans to remove the additional 25 percent tariff linked to Russian oil imports. However, the official stressed that the agreement requires India to fully cease, rather than merely reduce, purchases of Russian oil.
As more details are expected to emerge in the coming days, analysts say a full assessment of the deal will depend on greater transparency about the concessions made by both sides and how the commitments are implemented in practice.