India Secures Tariff Edge Over China, Pakistan and Bangladesh in New US Trade Pact

Washington: US President Donald Trump has recently announced a new trade agreement with India. In this, America has significantly reduced the tariff on Indian goods. Earlier the overall duty was around 50%, but now it has come down to 18%.

How much did the tariff reduce?

Actually earlier there was a reciprocal tariff of 25%, and on top of that, due to buying crude oil from Russia, there was an additional penalty tariff of 25%, making the total 50%. Now in the new agreement that penalty tariff has been removed, and the reciprocal tariff has been reduced to 18%. So the actual relief is a big one – a total reduction of 32% (from 50% to 18%).

Why does change matter?

Indian goods will now become cheaper and more competitive in the American market. Especially compared to countries that still have 19-20% tariffs in place, like many Southeast Asian countries. Indian exporters can get good benefits from this, especially in textile, pharma and other sectors.

What promise did India make?

Trump said in his post that in his conversation with PM Modi, India has promised to stop buying oil from Russia. Instead it will buy more energy from the US, and perhaps even from Venezuela. Also, India will work towards zeroing down its tariff and non-tariff barriers on American goods. Trump also claimed that India will buy goods worth more than $500 billion from American energy, technology, agriculture etc.

What did PM Modi say?

Modi ji also praised it on social media. He wrote that "Made in India products will now face 18% tariff" and thanked Trump. He called it a positive step for the strong economic relations between the two countries. However, he did not say anything on Russian oil or the promise of zero tariff.

What will happen next?

So far, both governments have not made many details public – such as when the new tariffs will come into effect, which goods it will apply to, or how many American goods India will buy. The outline of the complete agreement has not come out yet. So for now this is the initial announcement, other details are to come.

Overall, happiness is being expressed from both sides, and it seems that trade tension will reduce a bit. Let's see what happens next!