The India–United States trade deal of 2026: from 50 per cent tariffs to the edge of agreement

For most of 2025, India faced the steepest American tariffs of any major trading partner. After trade talks collapsed in August 2025, the United States imposed duties of up to 50 per cent on most Indian goods: a 25 per cent reciprocal tariff plus a further 25 per cent penalty linked to India's purchases of Russian oil. The duties hit labour-intensive exports such as textiles, gems and jewellery, and seafood, and they became the single largest shock to India's export economy in years.

The logjam began to break in February 2026, when the two sides agreed a framework for a first-phase deal. Under it, Washington cut the reciprocal tariff on Indian goods from 25 per cent to 18 per cent and removed the additional 25 per cent Russian-oil duty. In return, India committed to eliminate or reduce tariffs on American industrial goods and a range of farm products, including tree nuts, fruit, soybean oil, wine and spirits. The framework did not, however, settle the deal: it left the detailed text, and the question of how Indian exporters would compare with competitors, to further negotiation.

By October 2026 the first tranche was, in the words of Commerce and Industry Minister Piyush Goyal, going through its final contours and legal drafting. Goyal said India would finalise it only once it secured a competitive advantage over peer exporters such as Bangladesh, Vietnam and Indonesia. External Affairs Minister S. Jaishankar described the talks as nearing a landing point, while United States Trade Representative Jamieson Greer said on 2 October that a deal was not imminent. United States Secretary of State Marco Rubio, visiting Mumbai on 20 October, said the two sides were very close, with only a small number of items left. Dairy access for American producers is reported to be the biggest remaining obstacle.

Two complications hung over the endgame. President Donald Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act, which could authorise tariffs of up to 100 per cent on buyers of Russian oil, but then waived those tariffs for such buyers. Meanwhile the underlying trade kept growing: India's goods exports to the United States rose to 42.79 billion dollars in April–August 2026, from 40.39 billion dollars a year earlier, and India recorded a trade surplus of nearly 34 billion dollars with the United States in the financial year 2025–26. As of 1 November 2026, no signed final text had been published, so the 18 per cent framework rate and the unfinished negotiation remained the facts on the ground.