US President Donald Trump says he had agreed on a trade deal with India that slashes US tariffs on Indian goods to 18 per cent from 50 per cent in exchange for India lowering trade barriers, stopping its purchases of Russian oil and buying oil instead from the US and potentially Venezuela.
“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25 per cent to 18 per cent,” Trump said in a social media post following a call with Indian Prime Minister Narendra Modi.
A White House official told Reuters that the US was rescinding a punitive, 25 per cent duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25 per cent “reciprocal” tariff rate.
Modi also committed to buy more than $US500 billion ($A720 billion) worth of US energy, technology, agricultural and other products, Trump added.
“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent,” Modi said in a social media post on X.
“Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”
US-listed shares of major Indian companies rallied on the news.
IT consulting firm Infosys was up 3.53 per cent in afternoon trading, consultancy Wipro rose 7.0 per cent, HDFC Bank gained 3.4 per cent and the iShares MSCI India exchange-traded fund rallied 3.3 per cent.
On Saturday, Trump teased a potential deal for India to buy Venezuelan oil after the US seized Venezuelan President Nicolas Maduro in a military raid in early January.
The deal comes after months of tense trade negotiations between the world’s two largest democracies.
Last August, Trump doubled duties on imports from India to 50 per cent to pressure Indian firms to stop buying Russian oil, and earlier this month said the rate could rise again if it did not curb its purchases.
Purchases of Venezuelan oil would help replace some of the Russian oil bought by India, the world’s third-biggest oil importer.