India gains tariff advantage over China, Pakistan after US deal
What's the story
India has gained an advantage over its regional competitors in South and Southeast Asia after the United States slashed tariffs on Indian imports to 18%. The new tariff structure puts India ahead of Indonesia and Pakistan and Bangladesh and Vietnam, which have tariffs of 19% and 20%, respectively. China is also at a disadvantage with a much higher tariff of 34% on its exports to the US.
Trade agreement
US-India trade deal
The tariff reduction was part of a trade deal announced by US President Donald Trump on Monday. The deal lowers reciprocal tariffs from 25% to 18%, effective immediately. In a Truth Social post, Trump announced he spoke with Indian Prime Minister Narendra Modi, during which they spoke about many things, including trade and ending the war in Ukraine. Trump also claimed that Modi agreed to stop buying Russian oil and to buy much more from the US and, potentially, Venezuela.
Trump
What Trump said
"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 percent to 18 percent," Trump wrote. "They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States to ZERO," Trump's post read.
Mutual appreciation
PM Modi thanks Trump
Reacting to the announcement, PM Modi thanked President Trump on X. He wrote, "Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%." This accord comes only days after India struck a landmark trade pact with the European Union that is projected to reduce or eliminate tariffs on more than 96% of traded goods, excluding key farm products.
Oil agreement
Condition for tariff reduction
A White House official also confirmed to ANI that Washington would lift the additional 25% tariff on Indian imports linked to India's Russian oil purchases. The same official, however, clarified that India must "cease, not just reduce, Russian oil purchases" as part of the trade deal. "The agreement is that India will cease, not just reduce, Russian oil purchases," the official said when asked if tariffs on Indian imports would be lifted in exchange for reducing Russian oil purchases.