President Trump has announced a sweeping trade agreement with India, slashing U.S. tariffs on Indian goods from roughly 50% to 18% while securing commitments from Prime Minister Modi to halt Russian oil purchases and buy over $500 billion in American energy, technology, and agricultural products. The deal marks a major reversal after months of punitive tariffs that strained relations between the two nations.

U.S.-India trade tensions escalated in August 2025 when Trump imposed a 25% "punitive" tariff on India over its continued purchases of Russian oil, on top of existing 25% "reciprocal" tariffs. The combined 50% tariff rate threatened billions in bilateral trade. Under the new agreement, the punitive tariff is eliminated entirely and reciprocal tariffs drop to 18%. In exchange, India has committed to reducing its own tariffs to zero on American goods, purchasing U.S. energy instead of Russian crude, and investing heavily in American products. However, analysts note that Modi has not publicly confirmed all of Trump's claims — particularly the $500 billion figure and the complete halt to Russian oil purchases. Sensitive agricultural and dairy items are excluded from the deal.