US Cuts Reciprorocal Tariff on India to 18%, Removes 25% Levy
The US has removed the 25% tariff imposed on India; the reciprocal tariff rate will now be only 18%: The United States has stated that India has committed to ceasing imports of crude oil from Russia, either directly or indirectly. As a result, the US has removed the additional 25% tariff imposed on Indian goods due to India’s oil purchases from Russia, effective February 7. According to an executive order issued by the White House, India has also agreed to a framework for enhancing defense cooperation with the United States for the next 10 years.
The US had imposed the 25% additional tariff on imports of Indian goods in August 2022 as a punitive measure for India’s oil purchases from Russia. This brought the total tariff rate on goods from India to 50 percent, including the existing 25% reciprocal tariff. The US is India’s largest export destination, so Indian exporters suffered significant losses due to the 50 percent tariff.
Following the start of the Russia-Ukraine war in 2022, India became the largest buyer of discounted Russian seaborne crude oil. However, Western countries oppose this, having imposed sanctions on Russia’s energy sector, arguing that the revenue from oil sales helps fund Russia’s war efforts.
India and the United States unveiled a framework for an interim trade agreement on February 6. This is an initial step towards a comprehensive bilateral trade agreement (BTA). The key outcome is that the US will reduce reciprocal tariffs on Indian goods to 18%, while India has committed to significant tariff reductions and regulatory easing for US exports. The announcement of this interim trade agreement between the two countries was made earlier this week.
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