India-US Trade Deal: Trump Cuts Tariffs on Indian Goods to 18%, Leaving Pakistan and Bangladesh Behind

India-US Trade Deal: Trump Cuts Tariffs on Indian Goods to 18%, Leaving Pakistan and Bangladesh Behind

Washington/New Delhi, February 3, 2026: A major economic relief for India emerged following key talks between US President Donald Trump and Indian Prime Minister Narendra Modi. Under the trade agreement finalized on Monday, the US has decided to reduce retaliatory tariffs on Indian goods from the current 25% to 18%. This move opens new avenues for Indian exporters in the global market, as India now faces lower tariffs in the US compared to neighboring countries Pakistan and Bangladesh.

Prime Minister Modi welcomed the decision, stating that the tariff cut on “Made in India” products will further strengthen economic ties between the two nations. With this agreement, India’s 18% tariff is now significantly lower than Pakistan’s 19% and Bangladesh’s 20%. Notably, India previously topped the list of countries facing high US tariffs, but under the new list, Indian exports will become more competitive against several other South Asian nations.

The talks between Trump and Modi occurred while India’s External Affairs Minister S. Jaishankar was on a visit to Washington D.C. Although trade negotiations had stalled since October 2025—particularly after Trump warned of higher tariffs on India as a penalty for purchasing crude oil from Russia—this fresh agreement has resolved all concerns. Officials believe the decision will enable Indian goods to quickly gain ground in the US market over competitors from rival countries.