President Donald Trump announced a major bilateral trade agreement with India on Monday, significantly reducing tariffs on Indian goods entering the United States from 25% to 18%. The deal, which took effect immediately, is designed to foster closer economic ties and is projected by the White House to pave the way for over $500 billion in future U.S. exports, particularly in energy, agriculture, and advanced technology sectors.
In a key strategic shift, Indian Prime Minister Narendra Modi committed to halting oil imports from Russia and increasing energy purchases from the United States and other non-sanctioned sources like Venezuela. This move aligns India more closely with U.S. foreign policy objectives and is expected to reshape global energy flows. The U.S. Energy Department stated it would collaborate with Indian firms to ensure stable supplies and plans to send trade delegations to India in the coming weeks.
The financial markets reacted positively to the easing of trade tensions. The S&P 500 rose 0.7% and the Nasdaq climbed 0.8%, with gains seen across technology, industrial, and energy sectors. Conversely, safe-haven assets sold off, with gold dropping 4% to $4,660 and silver falling over 7% to $79, reflecting reduced investor demand for risk protection.
The agreement's impact was immediately felt in currency markets, where the Indian rupee surged 0.8% to 82.65 against the U.S. dollar, reaching its highest level in two-and-a-half weeks. Analysts attributed the rally to substantial foreign institutional investor inflows and reduced external sector risk, as the deal directly addresses tariff barriers and includes a dispute resolution mechanism. The benchmark Sensex index also climbed over 1.5%.
The U.S. Trade Representative's office emphasized that the agreement supports fair market access and long-term economic cooperation. Both nations have agreed to meet bi-annually to review the deal's progress, which also includes provisions for eased visa norms for skilled professionals and strengthened intellectual property protections.
