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How India gets upper hand over China, Pakistan, Bangladesh with new US trade deal
India’s advantage is even more pronounced when compared to China, where tariffs remain steep at 34 per cent. Pakistan faces tariffs of 19 per cent.
US President Donald Trump “genuinely” considers Prime Minister Narendra Modi a “great friend” – a remark by US ambassador Sergio Gor that now appears borne out by outcomes. The India-US trade deal announced by the Republican leader, which took nearly a year of hard bargaining and tested both New Delhi and Washington, has finally been sealed, and more so, it places India in a stronger trade position than key regional rivals, China, Pakistan and Bangladesh.
Under the deal, the US has reduced tariffs on Indian goods to 18 per cent; with this revised tariff structure, India has lower levies than several competing export economies.
Track Live Updates on India US trade deal here
A deal better than China, Pakistan
India’s advantage is even more pronounced when compared to China, where tariffs remain steep at 34 per cent. Indonesia faces tariffs of 19 per cent, while Bangladesh and Vietnam are subject to 20 per cent each.
New Delhi also edges past Pakistan, which continues to face tariffs of 19 per cent, despite showing warmer ties with Washington in recent months, including White House dinners with Islamabad’s army chief Asim Munir and official nominations of Donald Trump for the Nobel Peace Prize.
The shift will place Indian exporters in a more favourable position across multiple sectors, especially at a time when global supply chains are being recalibrated.
The tariff cut is also expected to provide major relief to India’s textile sector, a key employer heavily dependent on the US market, where it had been at a disadvantage against rivals such as Bangladesh, Vietnam and China due to higher duties.
Modi welcomes tariff cut
Prime Minister Narendra Modi welcomed the announcement, calling Trump a “dear friend” and highlighting the immediate benefit for Indian exporters.
“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” PM Modi wrote in a post on X.
Trump cites friendship with Modi
Earlier on Monday, US President Donald Trump announced that the two countries “have agreed to a trade deal”, cutting the reciprocal tariff on India from 25 per cent to 18 per cent.
He said the decision was taken “out of friendship and respect” for PM Modi and would come into force “effective immediately”.
In a post on Truth Social, Trump referred to a conversation with Modi earlier in the day, describing the Indian Prime Minister as one of his closest friends and a powerful global leader.
“It was an Honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and, a Powerful and Respected Leader of his Country. We spoke about many things, including Trade, and ending the War with Russia and Ukraine. He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” Trump's post read.
As per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%,” it added.
Trump also said India would reduce tariffs and non-tariff barriers against the US as part of the agreement.
Separately, a White House official confirmed to HT that Washington will also withdraw the additional 25 per cent tariff imposed on Indian imports over New Delhi’s purchase of Russian oil.
