US President Donald Trump has moved to remove an additional 25 percent tariff imposed on Indian goods following a trade agreement between the two countries, according to an executive order signed on Friday.
The extra duty, which had been levied over India’s purchases of Russian oil, will be lifted at 12:01 am Eastern Time on Saturday. The order states that India has committed to stopping the direct or indirect import of oil from the Russian Federation.
The decision comes days after Trump announced a broader trade deal with India, saying Prime Minister Narendra Modi had assured Washington that New Delhi would halt Russian oil purchases amid the ongoing Ukraine war.
As part of the agreement, India has also committed to buying energy products from the United States. The executive order further noted that New Delhi has recently agreed to a framework aimed at expanding defence cooperation between the two countries over the next decade.
Tariff reduction still to be rolled out
While the additional 25 percent tariff is being removed immediately, the wider reduction in so-called reciprocal tariffs is yet to be implemented. Under the agreement, US duties on Indian products are expected to be reduced to 18 percent from the earlier level of 25 percent.
Other provisions of the deal include the removal of tariffs on certain aircraft and aircraft parts. A separate joint statement released by the White House said India intends to purchase goods worth $500 billion from the United States over the next five years. These purchases are expected to include energy products, aircraft and parts, precious metals, technology products and coking coal.
The move marks a sharp decline in US tariff levels on Indian goods, which had stood at as high as 50 percent late last year. The agreement also helps ease months of strain between the two countries over India’s oil imports, which Washington has argued help finance the conflict in Ukraine.
The deal signals a reset in ties between Trump and Prime Minister Modi, whom the US President has previously described as one of his closest friends.
Trade experts have noted that the proposed 18 percent tariff rate could offer Indian exporters a slight advantage in the US market compared to regional competitors facing duties of around 19 to 20 percent.