A Deal Tied to Trade and Geopolitics
President Donald Trump said on Monday he 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 said India would slash import taxes on U.S. products to zero and commit to purchasing $500 billion worth of American goods.
The announcement follows months of pressure from Washington on New Delhi to curb its reliance on discounted Russian crude, which India ramped up after Russia’s 2022 invasion of Ukraine. Trump framed the move as a step toward ending the war, claiming the decision would help choke off Moscow’s oil revenues.
Modi welcomed the tariff cut, calling Trump’s leadership “vital for global peace, stability, and prosperity,” and described their phone call as productive, though he did not directly confirm an end to Russian oil purchases.
Oil, Ukraine, and an Unfinished Promise
India’s continued imports of Russian oil have long frustrated the U.S., which argues those purchases help finance Russia’s war effort. Trump has repeatedly said targeting energy revenue is the fastest way to push Moscow toward peace, even as he has struggled to deliver on his campaign promise to quickly end the conflict in Ukraine.
India became one of Russia’s biggest oil customers after Europe sharply reduced its purchases. In 2024, Russia supplied nearly 36% of India’s crude imports, roughly 1.8 million barrels per day. As recently as December, Russian President Vladimir Putin said Moscow was ready to continue uninterrupted fuel shipments to India despite U.S. pressure.
Trump’s latest announcement comes as his special envoy Steve Witkoff and son-in-law Jared Kushner are expected to take part in fresh talks with Russian and Ukrainian officials in Abu Dhabi later this week, according to a White House official.
From Tariff Threats to Trade Realignment
Earlier this year, Trump had imposed steep tariffs on India, first citing its trade surplus with the U.S. and later punishing New Delhi for buying Russian oil. At one point, combined import taxes on Indian goods reached 50%. Under the new plan, those penalties would be rolled back, bringing India closer to tariff levels applied to the EU and Japan.
The shift comes as India accelerates its global trade strategy. Just days ago, New Delhi finalized a long-awaited free trade agreement with the European Union, covering nearly all goods and affecting close to two billion people. India has also recently signed trade deals with Oman and New Zealand, signaling a broader push to diversify partnerships amid uncertainty caused by U.S. trade policies.
While Trump hailed the India deal as a win for American workers and global peace, questions remain over how quickly India can unwind its energy ties with Russia — and whether the promised trade commitments will fully materialize.
