Business & Economics
US Slashes 50% Tariffs to 18% as India Opens Markets in Interim Trade Pact
On 7 Feb 2026 Washington rolled back last year’s 50 % levy on Indian exports to a flat 18 %, while New Delhi agreed to its broadest tariff cuts yet on US industrial and farm goods under a newly signed “interim” trade framework.
Focusing Facts
- Effective immediately, US import duties on Indian textiles, leather, plastics and other goods drop from roughly 50 % (25 % punitive surcharge + 25 % reciprocal hike) to 18 %.
- India pledges to buy up to $500 billion in US energy, aircraft, tech products and coking coal between 2026-2031.
- India secured Section 232 ‘national-security’ relief on steel, aluminium, copper and auto parts—a concession previously granted only to the UK, Japan and South Korea.
Context
This deal recalls the 1985 US–Japan Semiconductor and Plaza Accords, when Washington used tariff threats to force market openings and managed-trade purchase targets; both temporarily eased frictions yet seeded later resentment. The pact fits a longer trend of the US leveraging Section 232 and tariff surcharges (2018-24) as bargaining chips, and of India’s gradual post-1991 shift from protectionism to selective liberalisation. Strategically, it signals the two countries’ intent to embed supply chains outside China, tie India’s energy demand to US exports, and align tech standards (not unlike the 1947 GATT framework anchoring post-war commerce). Over a 100-year horizon, its importance will hinge on whether the promised full Bilateral Trade Agreement materialises; if it stalls, today’s concessions may be remembered as another short-lived, politically driven tariff truce rather than a structural realignment of the global trading system.
Perspectives
Indian government officials and supportive mainstream business media
Indian government officials and supportive mainstream business media — Declare the interim pact a historic breakthrough that opens the $30-trillion US market, rolls back punishing tariffs to 18 %, and ultimately safeguards Indian sectors while paving the way to a fuller bilateral trade deal. The celebratory framing from ministers and business desks glosses over India’s sizeable tariff cuts on US farm goods and the fact that many Indian exports still face duties, reflecting political incentives to portray the Modi-Trump understanding as an unequivocal win.
Opposition parties and critical regional outlets
Opposition parties and critical regional outlets — Call the framework a "compromise on the country's dignity" that will ‘destroy farmers,’ balloon the trade deficit and leave India paying more while the US keeps charging 18 % on Indian goods. The rhetoric leans heavily on nationalist and populist language, selectively ignoring the concrete tariff relief Indian exporters just received and using the pact chiefly as ammunition against the Modi government. ( Asian News International (ANI) , Asianet News Network Pvt Ltd )
US business lobby and export-oriented industry voices
US business lobby and export-oriented industry voices — Hail the accord as a ‘historic milestone’ that cuts US tariffs, removes non-tariff barriers and immediately revives orders for Indian handicrafts and other exports. Corporate enthusiasm centres on market access and profit motives, so statements minimise any downside for Indian farmers or concerns about long-term trade imbalances. ( Asianet News Network Pvt Ltd , Asian News International (ANI) )