U.S. Cuts Tariffs on India to 18%, India Agrees to End Russian Oil Purchases

• S. President Donald Trump, on Monday, February 2, 2026, announced that he had agreed on a trade deal with India that slashes U.S. tariffs on Indian goods to 18% from 50% in exchange for India lowering trade barriers, stopping its purchases of Russian oil and buying oil instead from the U.S. and potentially Venezuela.
• Indian Prime Minister, Narendra Modi, whom Trump proclaimed to be “one of my greatest friends”, has also committed to buy more than US$500Bn worth of U.S. energy, technology, agricultural and other products, according to Donald Trump.
• On Saturday, Trump teased a potential deal for India to buy Venezuelan oil after the U.S. seized Venezuelan President Nicolas Maduro in a military raid in early January. The deal comes after months of tense trade negotiations between the world's two largest democracies.
• Last August, Trump doubled duties on imports from India to 50% to pressure New Delhi to stop buying Russian oil, and earlier this month said the rate could rise again if it did not curb its purchases. Purchases of Venezuelan oil would help replace some of the Russian oil bought by India, the world's third-biggest oil importer.
• India relies heavily on oil imports, covering around 90% of its needs, and importing cheaper Russian oil has helped lower its import costs since Moscow invaded Ukraine in 2022 and Western nations slapped sanctions on its energy exports. However, recently, India has begun to slow its purchases from Russia. In January, they were around 1.2Mn barrels per day (bpd) and are projected to decline to about 1Mn bpd in February and 800,000 bpd in March.
• Indian markets have been battered since the tariffs were levied by Washington, making it the worst-performing market among emerging nations in 2025, with record outflows of foreign investors.

(Sources: Reuters & The Guardian)