Why the new US-India trade agreement is a big deal

Дата публикации: 06-02-2026 21:30:08

For the India-China-US triangle, the new US-India trade deal, announced with Trumpian flourish on social media on Monday, has potentially significant economic, geopolitical and strategic implications.
US President Donald Trump’s post, which came after a phone call with Narendra Modi, said the Indian prime minister had committed to “BUY AMERICAN”, including over US$500 billion of US products. It also said Modi had “agreed to stop buying Russian Oil, and to buy much more from the United States and...

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US President Donald Trump’s post, which came after a phone call with Narendra Modi, said the Indian prime minister had committed to “BUY AMERICAN”, including over US$500 billion of US products. It also said Modi had “agreed to stop buying Russian Oil, and to buy much more from the United States and potentially Venezuela” which would “help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!”

Given how high-level diplomacy is increasingly being unveiled on social media, Modi’s response was swift, coming within the hour on X. “Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” he said. “President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace.”

The move marks a de-escalation in the deeply troubled India-US relationship, lowering trade tensions that had escalated as Trump leveraged tariffs to pressure allies and adversaries alike on issues like energy dependencies and trade imbalances.

The tariff cut is welcome news for an India reeling under the harsh increase to 50 per cent imposed in August over what Trump saw as New Delhi’s transgressions in buying Russian oil. For India, the new reduced tariff of 18 per cent is likely to restore buoyancy in its trade with the US and enhance export competitiveness amid stagnant global growth. Indian businesses and stock markets reacted positively, with the rupee expected to rally as trade barriers ease.

Comparing the social media posts of both leaders, it is instructive that while Trump said that India had agreed to stop buying Russian oil, there is no such reference in Modi’s post. The devil is in the detail – the fine print of the revised agreement has not yet been released.

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