Trump Ends Trade Standoff; Cuts Tariff to 18%

Feb 3, 2026 – After months of uncertainty and continuing deadlock, US President Donald Trump took everyone by surprise and announced on Monday (February 2) night that the US has decided to cut reciprocal tariffs on Indian products from 25% to 18%. This was following his phone conversation with Indian Prime Minister Narendra Modi earlier at around 9:00 pm.

Minutes after Trump’s announcement, PM Modi welcomed the decision with a post on X (formerly Twitter), writing: “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”

So, Indian goods exported to the US will now face a tariff of only 18% instead of 50%. The agreement will take effect immediately.

After this was announced, US Ambassador to India Sergio Gaur said in New Delhi, “I have said many times that Trump considers Modi a true and close friend. I am extremely excited by the news of the trade agreement. There are limitless possibilities in U.S.-India relations.”

Shortly thereafter, a White House official confirmed that the 25% penalty tariff imposed on purchases of Russian oil would also be withdrawn. Trump also claimed on his Truth Social platform that India has agreed to stop buying crude from Russia and will instead purchase from Venezuela. This, however, was not confirmed by the PM Modi.

India’s “mother of all deals” Free Trade Agreement (FTA) with the European Union (EU) on January 27, 2026, is being seen as the trigger for Trump to soften his stance. The US President had imposed 25% reciprocal tariff on India in April 2025 and then in August he imposed another 25% penalty tariff for buying crude from Russia.

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