Business & Economics
Tariff Truce: US Agrees to Cut Duties on Indian Imports to 18% in First-Phase Trade Deal
On 2 Feb 2026, after 18 months of on-again, off-again talks and a peak tariff of 50%, President Trump and Prime Minister Modi agreed to a first-tranche pact in which Washington will slash its reciprocal tariff on Indian goods from 25% to 18%.
Focusing Facts
- US tariffs on most Indian products had been raised to a cumulative 50% on 27 Aug 2025 (25% baseline + 25% Russia-oil penalty) before this deal rolled them back.
- Commerce Minister Piyush Goyal says a joint statement will be issued within 4-5 days and the binding legal text is targeted for signing by mid-March 2026.
- The leaders’ 2025 goal remains to lift two-way trade to USD 500 billion by 2030, up from USD 191 billion in 2024.
Context
Washington last used punitive tariff brinkmanship this aggressively when Nixon imposed a 10 % import surcharge in 1971; like then, the gambit coaxed concessions but at the cost of global uncertainty. The rollback fits a century-long pattern inaugurated by the 1934 Reciprocal Trade Agreements Act: threats, then bilateral bargains, rather than multilateral consensus. Strategically, the deal signals the US’s continued pivot toward India as a counter-weight to Chinese supply chains, while India leverages oil purchases from Russia and parallel FTAs (UK, EU) to avoid over-dependence on any single market. If sustained, the agreement could anchor a larger rules-based corridor between the two democracies; if it unravels, it will join the 2005-2008 Doha Round collapse as another reminder that tariff diplomacy rarely builds durable architecture. Viewed on a 100-year arc, the moment matters less for its modest 7-point tariff cut than for testing whether great-power competition in the 2020s is managed by coercive duties or by negotiated interdependence.
Perspectives
Indian business-oriented financial media
e.g., Economic Times, Forbes India, Business Standard — Portray the February 2 tariff-cut accord as a strategic victory for New Delhi that rewards India’s “patient” negotiating style and promises a major boost for exporters and bilateral trade growth. Their upbeat framing mirrors the Modi government’s messaging and serves readers invested in market optimism, so they gloss over the still-pending legal text and any Indian concessions mentioned only briefly in the copy.
Policy-focused national dailies emphasising procedural detail
e.g., The Hindu, ThePrint, The Telegraph — Stress that the announced understanding is merely the “first tranche” of a larger deal, with legal language, reciprocal Indian tariff cuts and broader commitments yet to be hammered out in March. By highlighting the remaining uncertainties and lack of investment pledges, they temper public enthusiasm and hold officials to account, but this hard-nosed stance can downplay the immediate benefits and score political points by appearing rigorously sceptical.