PM Modi Welcomes US Tariff Cut, Strengthens Partnership With Donald Trump

Prime Minister Narendra Modi has formally welcomed the United States' decision to reduce import tariffs on Indian products, describing it as a significant boost for the 'Make in India' initiative, while following a high-level telephonic conversation with President Donald Trump, the Prime Minister expressed gratitude on behalf of the Indian people for the reduction of tariffs from 25% to 18%. The revised rates have come into effect immediately, marking a pivotal moment in the trade relations between the world's two largest democracies. PM Modi emphasized that the leadership of President Trump is crucial for global peace and development.

Tariff Restructuring and Economic Implications

The reduction in tariffs follows a period of heightened trade duties where India faced a cumulative 50% tariff in the previous year. This 50% structure was composed of a 25% reciprocal tariff and an additional 25% penalty imposed due to India's oil procurement from Russia. Under the new agreement, the tariff on 'Make in India' goods has been slashed to 18%. President Trump has further indicated an intent to eventually reduce this 18% figure to zero in the future. According to trade analysts, this reduction will Importantly lower the cost of Indian exports to the US, potentially increasing the volume of trade in sectors such as textiles, engineering goods, and electronics.

Strategic Shift in Energy Procurement

A cornerstone of the recent discussions involves a strategic shift in India's energy import policy. President Trump stated that India has committed to purchasing oil from the United States and Venezuela instead of Russia, while this move is seen as a major geopolitical realignment, addressing US concerns regarding India's energy ties with Moscow. By diversifying its energy sources towards the Western hemisphere, India aims to strengthen its strategic autonomy while securing its energy needs. The Prime Minister noted that India is prepared to take its partnership with the US to new heights, particularly in the energy and infrastructure sectors.

Commitment to 'Buy American' Initiative

During the dialogue, India reiterated its commitment to promoting the 'Buy American' initiative. President Trump, referring to PM Modi as a 'good friend,' highlighted that the two nations discussed various issues, including trade imbalances, while india's pledge to increase the procurement of American goods and services is expected to foster a more balanced trade relationship. PM Modi stated that the collaboration between the two nations isn't just about economic gains but also about ensuring a stable and prosperous global order. The 'Buy American' commitment is viewed as a reciprocal gesture to the tariff concessions provided by the US administration.

Expert Analysis and Diplomatic Outlook

According to market analysts, the immediate 7% reduction in tariffs provides a competitive edge to Indian manufacturers in the American market. Analysts suggest that the decision to pivot away from Russian oil was a decisive factor in securing these trade concessions, while however, experts also point out that the path to a zero-tariff regime will require sustained diplomatic engagement and fulfillment of bilateral trade commitments. The discussions also touched upon broader cooperation in defense and technology, signaling a comprehensive strengthening of the Indo-US strategic partnership. Both leaders expressed optimism about the future trajectory of bilateral relations.

To sum it all up, the recent interaction between PM Modi and President Trump underscores a renewed momentum in Indo-US trade diplomacy. The reduction in tariffs and the realignment of energy imports reflect a pragmatic approach to bilateral challenges. As both nations move forward, the focus remains on achieving a mutually beneficial economic environment that supports growth and innovation in both India and the United States.

Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. 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…

— Narendra Modi (@narendramodi) February 2, 2026