United States has lifted the additional 25% tariff on Indian goods that was imposed over India’s purchases of Russian oil. The decision, announced on February 7, 2026, follows a trade agreement between the two countries. The move not only eases months of trade tensions but also signals a reset in India–US economic relations, with commitments on energy, defense cooperation, and reduced tariffs.
What Was the 25% Tariff and Why Was It Imposed
- The additional 25% tariff was imposed by Donald Trump in response to India’s continued purchases of Russian oil during the Ukraine conflict.
- Washington argued that such purchases indirectly funded the war. As a result, Indian goods faced significantly higher duties in the US market.
- With the latest executive order, this additional tariff will be removed from 12:01 am Eastern Time, restoring normal trade conditions for affected Indian exports.
Key Conditions Behind the 25% Tariff Removal
- According to the executive order, India has committed to stop importing Russian Federation oil, either directly or indirectly.
- In return, the US agreed to roll back the punitive tariff.
- The order also noted that India has agreed to expand defense cooperation with the United States over the next 10 years, reflecting deeper strategic alignment beyond trade alone.
Reduction in Reciprocal Tariffs: A Bigger Trade Reset
- Beyond lifting the extra 25% duty, the trade pact includes a reduction in so-called reciprocal tariffs on Indian products.
- These tariffs will be cut to 18% from the earlier 25%, once implementation is completed.
- This marks a sharp fall from the nearly 50% tariff level that Indian goods faced late last year, significantly improving India’s competitiveness in the US market.
India’s $500 Billion Purchase Commitment
- A major highlight of the deal is India’s commitment to purchase $500 billion worth of US products over the next five years.
- This includes energy products, aircraft and aircraft parts, precious metals, technology items, and coking coal.
- The agreement also includes the removal of tariffs on certain aircraft and aviation components, benefiting both countries’ aerospace and energy sectors.
Impact on Indian Exporters and Global Trade
- Trade experts say the 18% tariff rate gives Indian exporters a slight competitive edge over regional rivals facing duties of around 19-20%.
- The decision is expected to boost Indian exports, stabilise trade flows, and reduce uncertainty for businesses.
- It also restores close ties between Narendra Modi and President Trump, signalling renewed momentum in bilateral relations.
Question
Q. Why did the US lift the additional 25% tariff on Indian goods?
A. WTO ruling
B. Change in US Congress law
C. India’s commitment to stop importing Russian oil
D. Global oil price fall