US President Donald Trump said on Monday he had agreed a trade deal with India that cuts US tariffs on Indian goods to 18 percent from 50 percent in exchange for India lowering trade barriers, stopping purchases of Russian oil and buying oil from the US and potentially Venezuela instead.

“Out of friendship and respect for Prime Minister Modi and, at his request, effective immediately, we have agreed to a trade agreement between the United States and India, under which the United States will charge a reduced reciprocal tariff, lowering it from 25 percent to 18 percent,” Trump said in a social media post after talks with Indian Prime Minister Narendra Modi.

A White House official told Reuters the US is also lifting a punitive 25 percent tariff on all imports from India for buying Russian oil that was piled on top of the 25 percent “reciprocal” tariff rate.

Modi also pledged to buy more than $500 billion worth of US energy, technology, agricultural and other products, Trump added.

“Wonderful to speak with my dear friend President Trump today. I am delighted that Made in India products will now have a reduced tariff of 18 percent,” Modi said in a social media post on X. “Many thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”

WATCH | India and the EU signed a trade agreement:

India and the EU signed the ‘mother of all trade agreements’

A landmark new trade deal between India and the European Union cuts tariffs on nearly 97 percent of European goods, including cars, and is expected to double EU exports to the South Asian country by 2032. India will benefit from the elimination of tariffs on various products entering the EU. The agreement also promises easier access for highly qualified professionals from India to work in Europe.

India relies heavily on oil imports, covering about 90 percent of its needs, and imports of cheaper Russian oil have helped reduce import costs since Moscow invaded Ukraine in 2022 and Western countries imposed sanctions on its energy exports.

Recently, India has started to slow down its purchases from Russia. They were around 1.2 million barrels a day in January and are forecast to fall to around 1 million in February and 800,000 in March, according to a Reuters report.

Indian markets have been hit since Washington imposed tariffs, making it the worst-performing emerging market in 2025, with record foreign investor outflows.

WATCH | BC Premier Trade Mission in India:

BC PM represents India on gas, minerals during trade visit

British Prime Minister David Eby is pitching India on liquefied natural gas and mineral exports during his week-long trade visit as the two countries reel from a diplomatic crisis sparked by Canada accusing India of involvement in the killing of a prominent British Sikh activist.

Carney travels to India

Shares of major Indian companies listed on the US stock exchanges strengthened after this news. IT consultancy Infosys rose 3.53 percent in afternoon trade, consultancy Wipro gained seven percent, HDFC Bank rose 3.4 percent and the iShares MSCI India ETF gained 3.3 percent.

Prime Minister Mark Carney will visit India in the coming weeksaccording to India’s high commissioner to Canada, as both countries look to diversify their trading partners in the face of Trump’s trade war.

Carney’s visit follows a commitment by both leaders to launch negotiations on a new trade deal called the Comprehensive Economic Partnership Agreement (CEPA), announced when the two leaders met at the G20 summit in South Africa last November.

At the time, Carney’s office said it was accepted Modi’s invitation visit India “early 2026.”

On Saturday, Trump teased a potential deal by India to buy Venezuelan oil after the US captured Venezuelan President Nicolas Maduro in a military operation in early January.

The deal comes after months of tense trade talks between the world’s two largest democracies.

Last August, Trump doubled tariffs on Indian imports to 50 percent to pressure New Delhi to stop buying Russian oil, and earlier this month said the rate could rise again if it did not limit purchases.

Buying Venezuelan oil would help replace some of the Russian oil bought by India, the world’s third-largest oil importer.