India and US Reach Long-Delayed Trade Agreement Amid Mixed Reactions

Tue Feb 03 2026 12:08:44 GMT+0200 (Eastern European Standard Time)

Following a prolonged trade standoff, the United States and India have reached a significant agreement to lower tariffs, promising renewed economic ties despite uncertainties surrounding the details.

After years of heightening tensions over tariffs, US President Donald Trump's recent decision to reduce reciprocal tariffs on Indian goods from 50% to 18% has sparked a cautious optimism in India. While the agreement marks a new chapter in US-India trade, concerns linger over the specifics, particularly regarding sectors sensitive to tariffs. Experts urge a pragmatic approach to this development, emphasizing the need for clarity in the details to ensure beneficial outcomes for both nations.

In a notable shift in trade relations, US President Donald Trump has announced a reduction in reciprocal tariffs on Indian goods from 50% to 18%, sparking cautious optimism across India, the third-largest economy in Asia. This decision comes after a long period of strained ties exacerbated by Trump's tariffs that previously contributed to India's high tariff rates, the highest in the world.

India's economy has faced challenges in light of these tariffs, following Trump’s decision last year to increase import duties, which adversely affected India's key exports in textiles, seafood, and jewelry. The recent call between Trump and Indian Prime Minister Narendra Modi indicates a willingness to mend ties, with Trump asserting that Modi had agreed to change India's purchasing strategies regarding Russian oil, although India's government has not confirmed these claims.

Despite the potential for rejuvenated economic relations, commentators emphasize that the clarity of the agreement remains uncertain. Questions persist about which products the new tariffs will cover and whether India has indeed committed to zero tariffs on sensitive sectors, especially agriculture. The Global Trade and Research Initiative (GTRI) has urged caution, highlighting that while the announcement is politically significant, it should not be celebrated until clear terms are published.

Furthermore, as India seeks to diversify its trade and forge new agreements, recent reports suggest that Delhi's partnership with the European Union is progressing positively, adding to the complexity of its trade landscape. An influential Indian business leader described the agreement as potentially alleviating stresses on the rupee and markets, but time will reveal the true nature of these negotiations.

As geopolitical dynamics continue to evolve, analysts suggest that the thawing of US-India relations may prompt India to reassess its position within international alliances, particularly in relation to its ties with nations like China and Russia, indicating a pivotal moment in India's foreign policy strategy.