President Donald Trump announced Monday that the United States and India had reached a trade deal that will cut American tariffs on Indian goods to 18 percent, down from the 50 percent rate imposed last year. In exchange, Prime Minister Narendra Modi committed to halt India's purchases of Russian oil and buy other sources of energy instead.

The agreement, which Trump said would take effect immediately, came after a phone call between the two leaders. It marks a significant shift in relations between the world's two largest democracies after months of tension over trade imbalances and India's role as a top buyer of discounted Russian crude.

"This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!" Trump wrote on Truth Social.

Modi confirmed the deal in a post on X, thanking Trump "on behalf of the 1.4 billion people of India" and calling the reduced tariff rate "wonderful." He did not mention the commitment to stop buying Russian oil.

Terms of the Agreement

Under the deal, the United States will rescind a punitive 25 percent duty that Trump imposed on India last August specifically over its Russian oil purchases. That levy had been stacked on top of a 25 percent "reciprocal" tariff, bringing the total rate to 50 percent—among the highest applied to any American trading partner.

The new 18 percent rate brings India roughly in line with other major Asian economies, which face tariffs ranging from 15 to 19 percent.

In return, India agreed to reduce its own tariffs and non-tariff barriers on American goods "to zero," Trump said. Modi also committed to purchasing more than $500 billion in U.S. energy, technology, agricultural products and coal.

India will replace some of its Russian crude with oil from the United States and potentially Venezuela, Trump added. The South American country recently revised its hydrocarbons law to attract foreign investment in its vast reserves.

Neither government released the full text of the agreement, and the White House had not issued a formal proclamation or Federal Register notice as of Monday afternoon. Trump did not provide a timeline for when India would cease its Russian oil purchases.

A Sharp Reversal on Russian Crude

India has been one of the largest buyers of Russian oil since Moscow invaded Ukraine in 2022. Western sanctions drove down prices, and Indian refiners—many of which are equipped to process the thick, heavy crude Russia exports—took advantage of the discounts.

In January, India was importing roughly 1.2 million barrels of Russian oil per day. That figure was projected to fall to about 1 million barrels per day in February and 800,000 barrels per day in March, according to trade data—a decline that began before Monday's announcement.

India covers approximately 90 percent of its oil needs through imports, making it the world's third-largest buyer of crude. Its purchases of Russian energy have helped sustain Moscow's war economy even as the Kremlin faced sanctions from the West.

Trump has repeatedly argued that cutting off Russia's oil revenue is the most effective way to pressure Vladimir Putin into ending the war in Ukraine. The tariffs he imposed on India last year were explicitly designed to force New Delhi's hand.

"He agreed to stop buying Russian Oil," Trump said of Modi, "and to buy much more from the United States."

Trade Tensions and Market Reaction

The deal caps months of difficult negotiations between Washington and New Delhi.

The United States ran a $45.7 billion trade deficit with India last year. American officials had complained about India's high average tariffs on certain products—38 percent on agricultural goods, with rates hitting 45 percent on vegetable oil and roughly 50 percent on apples and corn.

India, for its part, resisted opening sensitive sectors like agriculture and dairy, which employ a large share of its population.

The agreement was welcomed by Indian markets. U.S.-listed shares of major Indian companies rose sharply Monday. IT consulting firm Infosys closed up 4.3 percent, consultancy Wipro gained 6.8 percent, and HDFC Bank added 4.4 percent. The iShares MSCI India exchange-traded fund rallied 3 percent.

India had been the worst-performing emerging market in 2025, with record outflows of foreign capital following Trump's tariffs. Analysts said the new 18 percent rate would eliminate a disproportionate drag on Indian exports and the rupee.

Not everyone celebrated. A coalition of more than 800 small businesses called "We Pay the Tariffs" criticized the deal as a "600% tax increase on American businesses compared to 2024." The group noted that U.S. tariffs on Indian imports had averaged 2 to 3 percent before Trump took office.

"That's not relief, it's a permanent tax hike," said Dan Anthony, the coalition's executive director.

Broader Implications

The agreement comes one week after India finalized a major free trade deal with the European Union—what Modi called the "mother of all deals." That pact will eliminate or reduce tariffs on 96.6 percent of traded goods by value over the next decade.

Some analysts had predicted the EU deal would accelerate negotiations with Washington by demonstrating India's willingness to open its markets. The rapid turnaround appeared to validate that view.

Senate Foreign Relations Committee Chairman James Risch, an Idaho Republican, called the agreement a multi-faceted victory.

"India is a close partner of the United States, with a prominent diaspora in our country, and an integral partner in countering China's malign influence in the Indo-Pacific," Risch said. The deal, he added, would help "counter Russian aggression and in its work to bring an end to Russia's war against Ukraine by cutting off India's support of the Russian energy sector."

China remains the world's largest purchaser of Russian oil. Trump did not impose tariffs on Beijing for its crude purchases, though he suggested over the weekend that he would be open to a deal with China on Venezuelan oil.

"China is welcome to come in," Trump said Saturday, "and would make a great deal on oil."

For now, India's commitment represents the most significant shift in the global oil market since the Trump administration began using tariffs to pressure countries away from Russian energy. Whether New Delhi follows through—and how quickly—will determine whether the deal delivers on Trump's promise to help end the war in Ukraine.