India, which was previously facing some of the steepest US tariffs among major emerging economies, will now be subject to an 18% levy — the lowest in the emerging market pack after South Korea.
Earlier, Indian exports had been hit with a 50% tariff, including a 25% penalty linked to the purchase of Russian oil. However, on Monday, US President Donald Trump and Prime Minister Narendra Modi held a telephone conversation and agreed to what has been described as a historic trade deal, expected to improve the competitiveness of Indian goods in the American market.
A comparison across emerging economies highlights the sharp disparity in tariff burdens. Brazil and China currently face the highest US levies, at 50% and 47.5% respectively. South Africa
is subject to a 30% tariff, while Mexico faces a 25% rate. Vietnam has been placed in the 20% bracket, and Thailand, the Philippines, Malaysia and Indonesia are each subject to 19% tariffs.
With its revised 18% rate, India now enjoys a clear advantage over most economies in South Asia and Southeast Asia. Bangladesh, Sri Lanka, Taiwan and Vietnam continue to face higher tariffs of 20%, while Pakistan, Indonesia, Malaysia, Thailand and the Philippines are levied 19%. Cambodia is also taxed at 19%.
The reduced tariff burden is expected to provide Indian exporters a significant edge, making products more price-competitive and potentially boosting trade flows into the US market.
What Trump Said On India Trade Deal?
US President Donald Trump on Monday held a phone conversation with Prime Minister Narendra Modi and later announced to bring down tariffs on India to 18%. Trump claimed India will move forward to reduce “tariffs and non tariff barriers” against the US to zero.
“Out of friendship and respect for Prime Minister Modi and, 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 per cent to 18 per cent,” the US president said on social media.
India will “likewise move forward to reduce their tariffs and non tariff barriers against the United States, to zero”, he said.
Trump said Modi also committed to “buy American” at a much higher level, in addition to over USD 500 billion dollars of US energy, technology, agricultural, coal, and many other products.
“Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that get things done something that cannot be said for most,” he said.
