On Monday, United States President Donald Trump announced a trade agreement with India that would reduce tariffs and increase trade between the two countries. The deal lowers the tariff Washington charges on Delhi from 25% to 18%. In return, India will reduce tariffs and non-tariff barriers against the United States to zero.
American leaders believe the deal will boost exports of American farm products to India. U.S. Secretary of Agriculture Brooke Rollins thanked Trump, saying the deal will help export more American farm products to India, lifting prices and pumping cash into rural America. In 2024, the U.S. agriculture trade deficit with India was $1.3 billion.
Indian Prime Minister Narendra Modi confirmed the revised 18% tariff rate, describing the agreement as a step toward restoring stability and momentum in bilateral ties.
The agreement is expected to help counter Russian aggression by reducing India's reliance on Russian energy. Tensions escalated in May 2025 after the U.S. announced a 25% tariff on all Indian imports entering the country from August 1, 2025, alongside an additional 25% levy linked to India’s purchases of Russian oil. Trump didn't mention if he will remove the additional 25% tariff on India for purchase of Russian crude, but a U.S. Embassy spokesman confirmed that “the final tariff will be 18%".
While shipments to the U.S. were hit following tariff hikes in late August, exports still rose 15.9% year-on-year to US$85.5 billion in January-November, while imports reached US$46.1 billion, according to government data.
However, the opposition in India remains skeptical, accusing the Narendra Modi government of "totally surrendering" to Washington. Congress MP K.C. Venugopal moved an adjournment motion in the Lok Sabha, seeking a discussion on the agreement, alleging that the deal could have “adverse consequences” for Indian industries and farmers. Concerns were raised that the agreement may involve opening India's agriculture sector to U.S. exports, which could jeopardize farmers' livelihoods and income security.
Indian Trade Minister Piyush Goyal said that sensitive sectors such as agriculture and dairy have been protected in the deal. A White House Executive Order issued on November 12, 2025, exempted coffee, tea, tropical fruits, fruit juices, cocoa, spices, bananas, tomatoes, beef, and some fertilizers from the 25–50% reciprocal tariffs imposed on April 2. These goods will now face only standard MFN duties, with the exemption taking effect on November 13.
According to GTRI, India's immediate export gains will be limited because its presence in the newly liberalized tariff lines is small. India has almost no presence in some of the largest tariff-exempt categories such as tomatoes, citrus fruits, melons, bananas, fresh fruits, and fruit juices.
Clean energy manufacturers also stand to gain. Prashant Mathur, CEO of solar manufacturer Saatvik Green Energy, said the tariff cut represents a “strategic turning point” for the sector. Mathur added that the move strengthens India's position as a credible alternative manufacturing base amid concerns around tariff circumvention by Chinese producers.
The US remains India's largest trading partner, with total goods and services trade rising more than 8% to US$212.3 billion in 2024, according to US government data.