Trump And Modi Seal Major US India Trade Pact

The United States and India have struck a landmark trade agreement that promises to reshape the economic and geopolitical landscape between two of the world’s largest democracies. Announced on February 2, 2026, following a phone call between President Donald Trump and Prime Minister Narendra Modi, the deal marks a dramatic shift in the nations’ relationship after months of escalating tariffs, oil diplomacy, and tense negotiations.

President Trump, in a series of posts on his Truth Social platform and subsequent statements, declared, “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% to 18%.” According to Fox News and The Washington Post, this reduction is a significant reversal from the previous combined 50% tariffs that had strained trade ties since mid-2025.

The agreement’s centerpiece is India’s commitment—at least according to Trump—to halt its purchase of Russian oil and dramatically increase imports from the United States and potentially Venezuela. Trump stated, “He [Modi] agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela.” The move is designed, Trump argued, to choke off a key revenue stream for Russia as the war in Ukraine continues to rage. “This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!” Trump said, emphasizing the deal’s intended impact on global security and stability.

India has been the world’s second-largest buyer of Russian crude, purchasing around 1.5 million barrels daily despite Western sanctions and mounting pressure from Washington. In August 2025, Trump had imposed a punishing 50% tariff on Indian goods—on top of existing tariffs—to force New Delhi’s hand. Yet, Indian refineries, which are configured to process the heavy, discounted Russian oil, continued their purchases, capitalizing on Moscow’s need to offload fuel in the face of global sanctions.

Monday’s breakthrough, according to Dow Jones & Company and BBC, came after months of “rancorous negotiations” that had driven US-India relations to their lowest point in decades. The deal not only lowers US tariffs on Indian products from 25% to 18%, but also sees India pledging to eliminate its own tariffs and non-tariff barriers on American goods. Trump claimed this would result in India buying over $500 billion worth of US energy, technology, agricultural, coal, and other products—a figure that, if realized, would represent a seismic shift in bilateral trade flows.

Prime Minister Modi, for his part, welcomed the reduced tariffs in a post on X (formerly Twitter), but notably did not mention any agreement to stop Russian oil purchases. “Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” Modi wrote. He continued, “When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.” Modi also praised Trump’s leadership, saying, “President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights.”

The absence of any explicit commitment on Russian oil in Modi’s statement has raised eyebrows. The Indian government has yet to issue an official statement confirming the cessation of Russian oil imports, and some analysts caution that logistical and economic realities—such as India’s refinery capabilities and the global oil market’s volatility—could complicate a rapid shift away from Russian crude. Still, the White House said the additional 25% tariff on Indian imports would be dropped in response to India reducing Russian oil purchases, signaling confidence in Modi’s assurances.

The announcement had immediate ripple effects in global markets. The price of crude oil dropped from about $65 per barrel on Friday, January 30, 2026, to around $61 on Monday, February 2, after news of the US-India deal broke, according to global trade data. Trump also indicated his intention to sell “between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil” at market price, a move that could further influence global energy dynamics.

In the broader context, the US-India trade agreement comes on the heels of another major development: India’s landmark free trade agreement with the European Union. Announced just days before the US deal, the EU-India pact creates one of the world’s largest trading zones, covering a market of 2 billion people and a quarter of global GDP. “Our FTA ushers in a new era. It unites two of the world’s largest economies,” the European Commission said, highlighting the growing importance of India as a global trade partner.

The Trump-Modi deal also carries significant geopolitical overtones. By encouraging India to pivot away from Russian oil, the United States is seeking to tighten the economic screws on Moscow and further isolate Russia on the world stage. At the same time, the deal offers India access to American energy and technology, potentially deepening its ties to the West at a moment when global alliances are in flux.

For Trump, the agreement is also a political win, allowing him to present himself as a dealmaker who can both advance American economic interests and confront global adversaries. “Prime Minister Modi and I are two people that GET THINGS DONE, something that cannot be said for most,” Trump boasted, underscoring his administration’s transactional approach to foreign policy.

Yet, the path ahead is not without obstacles. While Trump has presented the deal as a breakthrough that will “help END THE WAR in Ukraine,” the actual impact on Russia’s war machine remains to be seen. China, for example, remains the world’s largest purchaser of Russian oil, and Trump has not imposed similar tariffs on Beijing. In fact, he suggested over the weekend that China would be welcome to strike a deal to purchase Venezuelan oil, saying, “China is welcome to come in, and would make a great deal on oil.”

Meanwhile, the legal and political landscape in the United States remains unsettled. The Supreme Court has yet to rule on the legality of Trump’s tariffs, and some in Congress have expressed skepticism about the long-term benefits of the agreement. Others worry that India’s ability to quickly transition away from Russian oil may be overstated, given the country’s infrastructure and market realities.

Nevertheless, the US-India trade deal represents a significant diplomatic and economic milestone, one that could recalibrate the balance of power in both Asia and the wider world. As the dust settles, all eyes will be on New Delhi and Washington to see whether the promises made in this high-stakes agreement will translate into lasting change—or whether old patterns of rivalry and mistrust will reassert themselves.