New agreement lowers tariffs and expands agricultural market access
The United States and India finalized a major trade agreement aimed at strengthening economic ties and expanding trade in key sectors including agriculture. The deal focused on lowering tariffs, reducing trade barriers, and increasing the flow of goods between the two countries.
Under the agreement the United States agreed to reduce its reciprocal tariff rate on Indian goods from 25% to 18%. In return India committed to cutting its tariff on many American products to zero and lowering nontariff barriers that had limited U.S. exports. These steps were designed to make trade more balanced and predictable for businesses in both countries.
The agreement also included energy-related commitments. A separate 25% duty applied to India was removed after India agreed to stop further purchases of Russian oil. This move aligned trade policy with broader international goals while supporting energy cooperation between the two nations.
Talks for this agreement began nearly a year earlier when leaders from both countries announced plans for a multi-sector bilateral trade framework. That initiative included India’s pledge to increase purchases of U.S. oil gas military equipment and agricultural products. Both countries also set a long-term goal of expanding total bilateral trade to $500 billion by the year 2030.
Agriculture was a key focus of the agreement. Supporters said the deal would strengthen U.S. access to the Indian market by reducing tariffs and easing technical sanitary and phytosanitary barriers. The agreement also aimed to ensure that India adopts science-based standards for food safety and agricultural trade which can help farmers compete fairly.
Trade data highlighted why the agreement matters. During fiscal year 2025 total trade between the United States and India reached nearly 132 billion dollars. India recorded a trade surplus of about 41 billion dollars with the United States during that period.
Agricultural trade played an important role. U.S. agricultural exports to India totaled about $2.3 billion in 2024 while Indian agricultural exports to the United States reached nearly $3.1 billion. By lowering barriers and improving market access, the agreement was expected to support farmers to boost exports and strengthen long-term agricultural trade between the two countries.
Photo Credit: istock-fangxianuo