Big news from the US for India—President Trump has just announced that he will cut tariffs on Indian imports in half. He claimed that the US raised tariffs in the first place because India bought so much Russian oil. But now that India has reduced those imports, Trump believes it's time to loosen up.
Key Highlights
- The US signaled a softer stance on trade, easing tensions and fostering improved bilateral economic cooperation.
- Analysts expect renewed dialogue and potential trade agreements to strengthen global market stability and investor confidence.
Here's why the US is cutting tariffs
Trump put it quite bluntly. India used to rely significantly on Russian oil, therefore the US responded with high tariffs. Now that India has reduced its purchases, the United States feels safe lowering tariffs. Trump has been indicating for a time that economic relations with India may be improving, and now he says a trade agreement is closer than ever.
A look back on tariff hikes
Trump initially imposed a 25% reciprocal duty on Indian exports, then abruptly increased it to 50%. What's his reasoning? According to Trump, India's ties with Russia, particularly the purchase of oil and armaments, helped support Putin's conflict in Ukraine. He and his staff were openly critical of India's purchases.
On the trade agreement front
In February 2025, the two countries began formal trade talks, with the goal of reaching a bilateral trade agreement. However, after the United States increased tariffs, those conversations were effectively halted. They had previously gone through five rounds of negotiations before the raise. Then, in August, everything came to a halt as duties reached 50 percent.
Also Read: PM Modi's Bhutan Visit to Deepen India-Bhutan Trade & Investment
Now there is finally some good news
Tariffs are being reduced, and both sides appear to be ready to resume negotiations. This provides much-needed relief to Indian exporters and suggests that the two countries may reach a trade agreement shortly. Following months of tension, it is evident that relations between India and the United States are improving.
