Feb 2‑3 2026 US‑India Trade Deal Rewrites Tariff Landscape On February 2‑3 2026 President Donald Trump and Prime Minister Narendra Modi announced a bilateral trade agreement that ends India’s purchases of Russian crude and commits India to buy more oil from the United States, with possible supplemental imports from Venezuela [1][2][3]. The announcement was made via Trump’s Truth Social post and Modi’s X message, and White House Press Secretary Karoline Leavitt confirmed the details on February 3 2026 [1][2]. Both leaders described the pact as a personal‑rapport‑driven win for jobs and global stability.

U.S. Tariff on Indian Goods Slashed to 18 Percent The United States reduced its tariff on “Made in India” goods from a peak of 50 percent (including a 25 percent penalty linked to Russian oil purchases) to a uniform 18 percent rate, as outlined in the Trump announcement and the BBC report [2][3]. The new 18 percent levy replaces the August 2025 punitive tariff and applies across sectors such as energy, technology and agriculture [2][3]. Small‑business groups in the United States warned that the 18 percent rate remains six times higher than the pre‑Trump average of 2.5 percent [2].

India Eliminates Tariffs on U.S. Products, Targets Zero Barriers India agreed to eliminate all tariffs and non‑tariff barriers on U.S. imports, moving toward a zero‑percent level that mirrors the reciprocal reduction promised by Trump [1][3]. This reciprocal move contrasts with the 18 percent U.S. tariff on Indian goods, creating an asymmetrical but mutually beneficial tariff structure [1][2][3]. The Hindu’s February 4 report notes that the U.S. previously imposed a 50 percent overall tariff on India, which the new deal fully reverses [1].

$500 Billion Investment Pledge Spans Energy, Transport, Agriculture Modi pledged to channel $500 billion into U.S. markets, covering transportation, energy, agricultural and coal products, and potentially expanding to critical minerals [1][2]. The investment commitment was highlighted by Leavitt as a cornerstone of the agreement and is expected to generate jobs on both sides of the Pacific [1]. The pledge also aligns with Jaishankar’s February 2‑4 Washington visit for a Critical Minerals Ministerial, underscoring supply‑chain cooperation beyond tariffs [3].

Political Reactions Highlight Opposition and Parallel Trade Initiatives India’s opposition party criticised the deal as a capitulation, with Congress official Jairam Ramesh calling it a surrender of strategic interests [3]. Meanwhile, the European Union signed its own free‑trade pact with India a week earlier, a deal the EU calls “the mother of all deals” and projected to double EU exports to India by 2032 [2]. U.S. small‑business coalition “We Pay the Tariffs” labeled the 18 percent rate a tax hike, reflecting domestic dissent despite the bilateral leadership’s optimism [2].