US-India Close to Finalizing Trade Deal, Tariffs Expected to Drop to 15%-16%

2025-10-22

The United States and India are nearing the finalization of a bilateral trade agreement covering the energy and agricultural sectors. The deal is expected to slash U.S. tariffs on Indian goods from around 50% to between 15% and 16%. This move signals a notable easing of trade tensions since their peak earlier this year and reflects a recent phone conversation between President Trump and Prime Minister Modi, during which Modi pledged to gradually reduce India’s oil imports from Russia—paving the way for the agreement.

The agreement includes several key components: the U.S. will cut tariffs on Indian goods to around 15–16%, while India commits to gradually decreasing its imports of Russian oil and adjusting procurement strategies through state-owned refiners. Additionally, India will increase imports of U.S. non-GMO corn and soybean meal to enhance agricultural trade between the two countries. Both sides have also agreed to establish a regular review mechanism to improve transparency and stability in tariff and market access policies. The deal is expected to be officially announced at the ASEAN Summit in late October 2025.

The conclusion of this agreement not only alleviates tariff disputes between the U.S. and India but is also expected to boost bilateral trade and investment activities. In the short term (1–2 months), reduced tariffs are likely to enhance the competitiveness of Indian exports to the U.S., improve market sentiment, and attract greater foreign capital inflows. Over the medium term (within six months), continued progress in reducing Russian oil imports and expanding agricultural trade will strengthen economic ties between the two nations and elevate India’s position within the global supply chain. Investors and businesses should closely monitor developments in the bilateral review mechanism to seize potential opportunities and mitigate risks arising from future trade policy adjustments.