Indicating a positive turn in a bilateral relationship that had been under strain because of multiple issues, Prime Minister Narendra Modi announced that “Made in India” products will “now” attract a “reduced tariff of 18%” in the U.S., after a telephonic conversation with President Donald Trump on Monday.

The move is expected to significantly reduce the impact of the 50% penalty tariffs that Mr. Trump had imposed on India in August 2025. Minutes earlier, Mr. Trump had announced on social media platform Truth Social that India and the U.S. have “agreed to a trade deal”.

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“Delighted that Made in India products will now have a reduced tariff of 18%,” said Mr. Modi thanking Mr. Trump. “When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation,” said Mr. Modi in his post on X.

A little before Mr. Modi’s message, Mr. Trump announced on social media platform Truth Social that U.S. and India had “agreed” to a trade deal.

“…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% to 18%,” said Mr. Trump. He further claimed, “…they will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO”.

Commerce and Industry Minister Piyush Goyal welcomed the developments.

The Ministry of External Affairs is yet to respond to some of the questions related to the declaration and the details shared by Mr. Trump. The U.S. President had said in the Truth Social post that during his discussion, India agreeing “to stop buying Russian oil.” He also claimed that India will “buy much more from the United States and potentially, Venezuela”. Mr. Trump said that Mr. Modi had “committed” to increase purchase of U.S. products to $500 billion. The two announcements from Mr. Modi and Mr. Trump drew prompt response from the Congress party, with its general secretary (communications) Jairam Ramesh saying, “It appears Mr. Modi has capitulated finally.”

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The telephone conversation between Mr. Modi and Mr. Trump took place as External Affairs Minister S. Jaishankar started a visit to the United States from February 2 to 4, when he will participate in the Critical Minerals Ministerial meet convened by U.S. Secretary of State Marco Rubio.

“The Ministerial will focus on supply chain resilience, clean energy transitions, and strategic cooperation in critical minerals,” said the MEA announcing that Mr. Jaishankar during the ongoing tour “will also hold meetings with senior members of the US administration.” Apart from India, dozens of other countries like Kenya, South Korea, Democratic Republic of Congo that have significant national minerals production will be part of the meeting. The ministerial is aimed at reducing critical minerals dependence on China and create a supply chain that will cover the entire supply chain from mining, processing, recycling, to pricing mechanism. The participating countries are also expected to sign a non-binding document.

U.S. Secretary of State Marco Rubio wished India on Republic Day, as he appreciated Quad cooperation between the countries on defence and other fronts.

He said that the U.S.-India relationship delivers “real results” for the two countries through close cooperation on defence, energy, critical minerals and for the Indo-Pacific region through the Quad.

The U.S. leader extended a special message to India on the country’s Republic Day, commemorated on January 26.

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“On behalf of the people of the United States, I extend my heartfelt congratulations to the people of India on your Republic Day,” Mr. Rubio said on Sunday (January 25, 2026).

“The United States and India share a historic bond. From our close cooperation on defense, energy, critical minerals, and emerging technologies to our multi-layered engagement through the Quad, the U.S.-India relationship delivers real results for our two countries and for the Indo-Pacific region,” he said, referring to the grouping of Australia, India, Japan and the U.S.

Mr. Rubio said he looks forward to working together with India to “advance our shared objectives in the year ahead.”

The Bureau of South and Central Asian Affairs also congratulated India on the occasion.

“Happy Republic Day, India! The U.S. joins the people of India celebrating your country’s adoption of the Constitution and we look forward to seeing what the world’s two largest and vibrant democracies will achieve together in the year ahead,” the agency said in a post on X.

India and the U.S. are “very close” to finalising an initial trade agreement on reciprocal tariffs, Commerce Secretary Rajesh Agrawal said, although he declined from specifying a deadline for it. 

On the negotiations with the European Union, Mr. Agrawal said both sides are at the final stage where all that is left are the topics where the two sides have differences, which are gradually being resolved. 

“On the India-U.S. trade deal, we have done six formal rounds of negotiations where we have discussed both the full-fledged Bilateral Trade Agreement for which we signed the Terms of Reference in March and also an interim framework deal that can address the reciprocal tariffs,” Mr. Agrawal said at a press conference.   

“We are very close on at least the framework deal which we feel can be done in a short period of time, but I would not like to put a time period to it,” he added.

In the case of the negotiations with the European Union on a Free Trade Agreement, the Commerce Secretary said that the two sides are consistently narrowing down their differences. 

“What happens when you reach the closure of a deal, there are a set of differences on the table where we are not able to agree,” Mr. Agrawal said. “Every meeting helps us reduce those differences. Every day our teams are engaged on some issue or the other.” 

“I will not say there will be formal rounds from now, but there will continue to be physical and virtual meetings to take this forward towards conclusion,” he explained.  

On the negotiations with the Eurasian Economic Union (EAEU), which includes Russia, Mr. Agrawal said that talks are still in an early stage but that the next round of negotiations are proposed to be in February 2026.

“With New Zealand, we did the fourth round in November 2025, which was a formal round,” he said. “After that some physical meetings have taken place as well as virtual. We are in a good zone and we expect that it [the FTA] will be closed and finalised soon.” 

“On the India-Chile FTA, the fourth round happened in early December and we are progressing well there,” Mr. Agrawal said. “With Peru also, there is progress but it is not up to the Chile mark.” 

U.S. President Donald Trump on Monday (October 6, 2025) described his use of tariffs as a measure to stop wars, and said that his communication to India and Pakistan during the recent conflict was “very effective”, repeating his claim of ending the battle between the nuclear-armed neighbours using trade.

“Tariffs are very important for the United States. We are a peacekeeper because of tariffs. Not only do we make hundreds of billions of dollars, but we’re a peacekeeper because of tariffs,” Mr. Trump said in the Oval Office on Monday (October 6, 2025).

The U.S. president said that if he did not use the “power of tariffs”, four wars would still be raging.

“I use tariffs to stop wars. If you look at India and Pakistan, they were ready to go at it. Seven planes were shot down. They were ready to go at it. And they are nuclear powers.

“And I don’t want to say exactly what I said, but what I said was very effective. They stopped. And that was based on tariffs. It was based on trade,” he said.

India has consistently denied any third-party intervention. India launched Operation Sindoor on May 7, targeting terror infrastructure in Pakistan and Pakistan-occupied Kashmir in retaliation for the April 22 Pahalgam attack that killed 26 civilians.

India and Pakistan reached an understanding on May 10 to end the conflict after four days of intense cross-border drone and missile strikes.

India has consistently maintained that the understanding on cessation of hostilities with Pakistan was reached following direct talks between the Directors General of Military Operations (DGMOs) of the two militaries.

Prime Minister Narendra Modi has made it clear in Parliament that no leader of any country asked India to stop Operation Sindoor.

Mr. Trump has repeated several times that he ended seven wars in the second term of his administration so far, including India and Pakistan, Cambodia and Thailand, Kosovo and Serbia, the Congo and Rwanda, Israel and Iran, Egypt and Ethiopia and Armenia and Azerbaijan.

Since May 10, when Mr. Trump announced on social media that India and Pakistan had agreed to a “full and immediate” ceasefire after a “long night” of talks mediated by Washington, he has repeated his claim dozens of times that he “helped settle” the conflict between India and Pakistan.

The U.S. president added that of the seven wars he ended, at least half of them were because of his “ability at trade and because of tariffs. If I didn’t have tariffs to throw around a little bit, you would have at least four wars raging right now, with thousands of people a day being killed.”

Powerful American Senator and Democratic Whip Dick Durbin (D-IL) has accused President Donald Trump of weakening America’s global standing and driving India toward closer ties with Russia and China through his tariff policies.

In a Senate floor speech, Mr. Durbin warned that Mr. Trump’s trade measures were hurting American families while reshaping global alignments. “President Trump’s tariff policies have pushed India away from us and toward our rivals. Instead of strengthening our hand, they are weakening our position around the globe,” he said.

Mr. Durbin linked tariffs to rising inflation in the United States, with the cost of school supplies up 12 percent and basic items like vegetables, coffee, and eggs significantly higher. “His misguided tariff wars have led to fear, uncertainty, and higher prices for American consumers,” he said.

He added that U.S. manufacturing could lose nearly $500 billion in investment by 2029, hurting traditional industrial hubs.

Beyond economics, Mr. Durbin said Trump’s approach risked eroding U.S. influence. “Just last week, Vladimir Putin of Russia and President Xi of China — our biggest adversaries — were seen smiling with Prime Minister Modi of India during a trilateral meeting,” Durbin said. “These tariffs mean higher prices, less opportunity, and a weaker standing abroad.”

Mr. Durbin called for a reversal of the policies, describing them as chaotic, inflationary, and internationally damaging.

“Now, some targeted tariffs in areas where there is unfair foreign competition can be warranted, but that is not what is happening,” said Durbin. “What we have is chaos. Everyone knows this sloppy approach by this Administration is a bad deal for the American people, and yet another example of executive overreach by this President, which is why the courts have ruled these tariffs illegal. But instead of respecting the courts, Trump has doubled down. On a Truth Social post, he said, ‘Without Tariffs… our Country would be completely destroyed, and our military power would be instantly obliterated,’” he said.

(This article is published in an arrangement with 5wh.com)