Deal Tied to Russian Oil and Trade Promises
President Donald Trump said on Monday that the United States plans to reduce tariffs on Indian goods to 18%, down from 25%, after Indian Prime Minister Narendra Modi agreed to stop buying Russian oil. Trump also claimed India would eliminate import taxes on U.S. goods and commit to purchasing $500 billion worth of American products.
The move follows months of pressure from Washington over India’s continued reliance on discounted Russian crude, which surged after much of the world cut energy ties with Moscow following its invasion of Ukraine in 2022. Trump framed the agreement as a step toward ending the war, saying it would cut off a key source of funding for Russia’s military campaign.
Modi welcomed the tariff announcement, calling Trump’s leadership “vital for global peace, stability, and prosperity,” and described their recent phone call as productive. He did not directly address Trump’s claim about halting Russian oil imports.
Ukraine War Looms Over Trade Talks
India’s oil purchases from Russia have been a persistent source of tension as Trump seeks progress on his pledge to bring the Ukraine war to an end. While he has leaned heavily on tariffs as a foreign policy tool, he has so far been reluctant to confront Russian President Vladimir Putin directly.
India became one of Russia’s largest oil customers after the war began, buying heavily discounted crude as European demand collapsed. Last year, Russian oil accounted for about 36% of India’s crude imports, roughly 1.8 million barrels per day. Moscow has repeatedly signaled its willingness to keep supplies flowing despite U.S. pressure.
The tariff announcement comes as Trump’s special envoy Steve Witkoff and senior adviser Jared Kushner are expected to take part in renewed talks with Russian and Ukrainian officials in Abu Dhabi, aimed at exploring a possible path to ending the conflict.
From Tariff Threats to Trade Realignment
Trump had sharply escalated trade pressure on India earlier this year, announcing a 25% tariff in June over trade imbalances and market access issues, followed by another 25% hike in August tied directly to India’s Russian oil purchases. The combined rate reached 50% before this latest shift.
Under the new plan, the tariff rate would fall to 18%, roughly in line with what the U.S. charges allies such as the European Union and Japan. A White House official confirmed that the additional oil-related tariff would be scrapped entirely.
The timing is notable. Just days earlier, India and the European Union finalized a sweeping free trade agreement after nearly 20 years of negotiations, covering most goods and affecting nearly 2 billion people. The deal reflects a broader push by India to diversify its trade partnerships as global commerce adjusts to Trump’s aggressive tariff strategy.
India has also moved quickly on other fronts, signing a trade deal with Oman in December and wrapping up negotiations with New Zealand, signaling a broader effort to secure markets and reduce exposure to sudden trade shocks.
