The TOI correspondent from Washington: US president Donald Trump on Friday signed an executive order that formally removes punitive tariffs on Indian imports, cementing a high-stakes trade, energy, and security deal aimed at returning US–India ties to normalcy. The order, effective immediately, ends a months-long economic standoff triggered by New Delhi’s purchases of Russian oil and India’s resentment over what it saw as punitive tariffs. The executive order—titled “Modifying Duties to Address Threats to the United States by the Government of the Russian Federation”—eliminates a 25% additional duty imposed on Indian goods in August 2025 under sanctions targeting Moscow. That penalty had been layered atop a 25% reciprocal tariff, pushing effective US duties on some Indian exports to as high as 50%. Under the new framework, tariffs on Indian goods will fall to 18%, restoring New Delhi’s standing as a preferred US trading partner.
The order codifies an interim trade agreement reached earlier this week following a February 2 phone call between president Trump and PM Modi. At the core of the deal is India’s commitment to cease all direct and indirect imports of Russian crude oil, a step Washington views as critical to tightening economic pressure on the Kremlin over the war in Ukraine.“India has taken significant steps to address the national emergency and to align sufficiently with the United States on national security and foreign policy,” Trump said in the order, calling the tariff modification “necessary and appropriate” to counter the threat posed by Russia.For much of 2024 and 2025, India had emerged as one of the largest buyers of discounted Russian oil, importing more than two million barrels per day at its peak. Those purchases helped cushion India’s energy costs but drew sharp criticism from the Trump administration, which accused New Delhi of undermining Western sanctions. The August 2025 tariff escalation marked a low point in bilateral economic ties.Under the new agreement, India has pledged not only to halt Russian oil imports but also to significantly expand purchases from the United States. According to the White House, New Delhi has committed to buying $500 billion worth of American energy, technology and agricultural products over the next five years, more than doubling current purchases. These include crude oil and liquefied natural gas, aircraft and parts, advanced technology such as graphics processing units (GPUs), and farm commodities.The agreement, presented as a “framework” ahead of an interim trade deal, left plenty of wiggle room for both sides and more bargaining in the coming weeks. It said India will “eliminate or reduce” tariffs on all US industrial goods and a “wide range” of US food and agricultural products,” leaving many grey areas.While the executive order said India “has committed to stop directly or indirectly importing Russian Federation oil,” New Delhi maintained that ensuring the energy security of 1.4 billion Indians is the supreme priority of the government. “Diversifying our energy sourcing in keeping with objective market conditions and evolving international dynamics is at the core of our strategy to ensure this. All of India’s actions are taken and will be taken with this in mind.“At the same time, chief economic adviser Anantha Nageswaran maintained that India’s partners, including Moscow, recognise these constraints and that India does not expect serious disruption if prices stay stable.The executive order also includes strict enforcement provisions. It authorises the US commerce secretary, in coordination with the State Department, to continuously monitor Indian oil imports. Any resumption of Russian crude purchases—directly or through intermediaries—could trigger an immediate “snapback” of the 25% punitive tariff. Secretary of state Marco Rubio has also been empowered to invoke the International Emergency Economic Powers Act (IEEPA) to impose further sanctions if compliance falters. But the legality of IEEPA itself is awaiting a US Supreme Court ruling. The deal also carries significant strategic weight that goes beyond trade. The executive order affirmed that India has entered into a new 10-year defence cooperation framework with Washington, deepening collaboration on military technology, supply chains and regional security. While the interim framework stops short of a full free trade agreement, officials on both sides say negotiations are underway to finalise a broader bilateral trade pact by mid-March. The executive order underscores Trump’s transactional approach to foreign policy—using tariffs as leverage, then rolling them back in exchange for strategic alignment. For India, it signals the limits of neutrality and non-alignment in a sanctions-driven global order.
