FAQs on Trump 18% tariff relief: What does the trade deal mean for India, Russian oil? – The Times of India

At current, the exact phrases of the settlement haven’t been disclosed. (AI picture)

India-US trade deal: After months of stalemate, India and the US have finalised a trade deal that reduces tariffs imposed on New Delhi to 18%, putting the nation at an advantageous place in comparison with different export rivals like China, Pakistan, Bangladesh, and Vietnam. The improvement is important as a result of Indian items coming into the US market face sharply increased duties, with complete tariffs rising to as a lot as 50% from August 27, 2025.In August 2025, Donald Trump had introduced a 25% tariff on Indian exports, together with a further 25% punitive levy that was linked to India’s purchases of Russian crude oil and defence gear.

Now, Trump has introduced that this can come all the way down to 18%. White Home officers have been quoted in varied experiences as saying that the 25% tariff for Russian crude shall be eliminated as effectively. Prime Minister Narendra Modi welcomed the transfer, saying he was happy that “Made in India merchandise will now have a lowered tariff of 18%.”Additionally Learn | India-US trade deal: High 7 factors Trump says he agreed on with PM ModiWhat can we learn about the India-US trade deal up to now and why is it essential? We have a look:

India-US Trade Deal Defined: High Factors

Particulars of deal: At current, the exact phrases of the settlement haven’t been disclosed. Larger readability is predicted as soon as the United States points an government order addressing the tariff adjustments, whereas the formal trade settlement textual content is prone to spell out which sectors fall underneath the association. Each paperwork are nonetheless awaited.Saying the deal on Monday, Trump stated that India has dedicated to purchasing greater than $500 billion value of American items. As per a report by Reuters, the purchases would span key sectors together with petroleum, defence, electronics, prescription drugs, telecom gear and plane, with some agricultural merchandise additionally lined. US agriculture trade secretary Brooke Rollins additionally confirmed that the deal offers better entry for US agricultural exports to India, a transfer aimed toward decreasing America’s farm trade deficit.India will get again aggressive edge towards rivalsTariffs are taxes or customs duties which might be levied by a rustic on items imported from overseas. These prices are paid by the importer to the authorities and are normally handed on to patrons in the kind of increased costs. Import duties increase the price of overseas items in the home market. Competitiveness can also be influenced by different elements, together with the tariff ranges confronted by rival exporting nations corresponding to Bangladesh at 20%, Vietnam at 20% and Thailand at 19%, in addition to product high quality and compliance with requirements. Pakistan faces 19% tariffs and China has a levy of 34%. Therefore, with the India-US trade deal, Indian exports to the US turn into extra aggressive in comparison with its South Asian regional friends.Additionally Learn | Trump’s shock announcement: How US blinked and stated sure to trade deal with IndiaWhat Trump stated“It was an Honor to talk with Prime Minister Modi, of India…We spoke about many issues, together with Trade…He agreed to cease shopping for Russian Oil, and to purchase far more from the United States and, probably, Venezuela.This can assist END THE WAR in Ukraine, which is going down proper now, with 1000’s of individuals dying every week! Out of friendship and respect for Prime Minister Modi and, as per his request, efficient instantly, we agreed to a Trade Deal between the United States and India, whereby the United States will cost a lowered Reciprocal Tariff, decreasing it from 25% to 18%.They may likewise transfer ahead to cut back their Tariffs and Non Tariff Limitations towards the United States, to ZERO. The Prime Minister additionally dedicated to ‘BUY AMERICAN,’ at a a lot increased stage, along with over $500 BILLION DOLLARS of US Power, Know-how, Agricultural, Coal, and lots of different merchandise.”

India US trade deal timeline

Lack of readability on Russian crudeWhereas Trump has claimed that India will cease shopping for Russian crude, no such official affirmation has come from Indian oil. Russia is presently India’s largest supply of Russian crude, however with a reasonably diversified basket of vitality companions, India might not discover it troublesome to modify away from Russian oil. A White Home officers quoted in an ANI report stated that the 25% penal tariff is being eliminated on India, however it’s conditional on India fully stopping Russian crude imports. Indian refiners are reportedly awaiting readability from the authorities on the similar.US is India’s Largest Buying and selling CompanionBetween 2021 and 2025, the United States was India’s largest buying and selling associate in items. It accounted for roughly 18% of India’s exports, about 6.22% of its imports, and practically 10.73% of complete two-manner trade. In 2024-25, bilateral merchandise trade reached $186 billion, which included $86.5 billion in exports and $45.3 billion in imports.India posted a trade surplus with the US of $41 billion in 2024-25, in contrast with $35.32 billion a yr earlier and $27.7 billion in 2022-23. In companies trade, India recorded exports of round $28.7 billion and imports of $25.5 billion, leading to a surplus of $3.2 billion.Taken collectively, India’s total trade surplus with the United States stood at roughly $44.4 billion.Estimates point out that in the calendar yr 2024, the United States imported companies from India value $40.6 billion. Of this, pc and knowledge know-how companies accounted for $16.7 billion, whereas enterprise administration and consulting companies contributed $7.5 billion.India-US trade in commoditiesIn 2024, India’s shipments to the United States have been led by pharmaceutical formulations and organic merchandise valued at $8.1 billion. Different main export objects included telecom gear value $6.5 billion, treasured and semi-treasured stones at $5.3 billion, petroleum merchandise at $4.1 billion, gold and different jewelry made of treasured metals amounting to $3.2 billion, cars and auto parts valued at $2.8 billion, cotton prepared-made clothes together with equipment at $2.8 billion, and iron and metal merchandise at $2.7 billion. Just lately, smartphones have additionally turn into a giant factor of India’s exports basket to the US, however these remained exempt from Trump’s tariffs.On the import aspect, India sourced crude oil value $4.5 billion from the US, adopted by petroleum merchandise valued at $3.6 billion, coal and coke at $3.4 billion, minimize and polished diamonds at $2.6 billion, electrical equipment value $1.4 billion, plane, spacecraft and associated elements at $1.3 billion, and gold imports additionally amounting to $1.3 billion.Additionally Learn | India-US trade deal: High shares that may profit from lowered 18% tariffs – test sector-sensible listingWhich sectors will profit? Industries that rely closely on labour, together with attire, leather-based and non-leather-based footwear, gems and jewelry, carpets and handicrafts, stand to realize from the transfer. 50% US tariffs had been weighing on exports from these segments, and any easing may assist revive shipments.What consultants are saying:Attire Export Promotion Council Chairman A Sakthivel stated the improvement is predicted to strengthen attire exports, draw new investments throughout the provide chain and additional set up India as a reliable world sourcing vacation spot.Federation of Indian Export Organisations President SC Ralhan famous that the settlement may lead to the fast launch of orders that had been deferred earlier, particularly in labour-intensive industries corresponding to clothes, textiles, leather-based and footwear.Manoj Mishra, Companion and Tax Controversy Administration Chief, Grant Thornton Bharat stated, “The India–US trade deal, reducing reciprocal tariffs on Indian exports from 50% to 18%, is a constructive improvement notably for MSME-led sectors corresponding to textiles and attire, gems and jewelry, and leather-based, which have been hardest hit by latest tariff hikes. The transfer reinforces India’s place as a dependable lengthy-time period sourcing associate for the US, supporting order restoration and restoring purchaser confidence. Alongside parallel market-diversification efforts, together with the India–EU FTA, the deal may meaningfully improve export competitiveness, increase affected sectors, and assist broader financial progress. Nevertheless, a predictable, clear, and effectively-notified tariff framework shall be crucial to sustaining export momentum and deepening India–US trade ties.”

India’s latest FTAs

Reacting to the announcement, Moody’s Scores stated,“The discount of the US tariff price on most Indian items will reinvigorate India’s items export progress to the US, which stays the nation’s largest items export market, accounting for about 21% of India’s complete items exports for the first eleven months of 2025. Decrease tariff price may even be credit score constructive for labor intensive sectors corresponding to gems, jewellery, textiles and attire, which rank the high export sectors. Nevertheless, prescription drugs and client electronics, the different two main export sectors, had been exempt from the 50% excessive tariffs and due to this fact are unlikely to be affected by the tariff discount.Despite the fact that India has lowered its buy of crude oil from Russia in latest months, it’s unlikely to stop all purchases instantly which may very well be disruptive to India’s financial progress. An entire shift towards non-Russian oil may additionally tighten provide elsewhere, increase costs and go by to increased inflation provided that India is one of the world’s largest oil importers.”