TLDR
- US lowers tariffs on Indian goods from 25% to 18% under new Trump-Modi trade deal
- Modi commits to stopping Russian oil imports and increasing US energy purchases
- S&P 500 gains 0.7% while Nasdaq rises 0.8% on easing trade tensions
- Gold drops 4% and silver falls 7% as investor demand for safe-havens declines
President Donald Trump announced a major trade breakthrough with India on Monday, reducing tariffs on Indian goods from 25% to 18%. The deal signals closer economic ties between the two nations as Prime Minister Narendra Modi committed to increasing US imports and ending Russian oil purchases. Investors responded positively, with US markets rising as trade tensions eased and fresh opportunities opened for American exports across energy, agriculture, and technology sectors.
Tariffs Reduced in Fresh Trade Agreement
On Monday, President Donald Trump confirmed a new trade deal with India that lowers tariffs on Indian goods entering the United States. The tariff rate was reduced from 25% to 18%, with the changes taking effect immediately.
Prime Minister Narendra Modi also acknowledged the agreement. He stated that India would expand its imports from the United States. The focus will be on energy, agricultural goods, and advanced technology. Trump said, “This trade deal paves the way for over $500 billion in future exports from the US.”
✅India-US Trade Deal Announced
– 18% Tariffs on India, down from 25%
– $500Bn of American Energy
– India Gets Venezuelan OilTrump says:
“Prime Minister Modi and I are two people that GET THINGS DONE, something that cannot be said for most” pic.twitter.com/CHlQtKKMdP— SECTOR RESEARCH (@SECTOR_RES0123) February 2, 2026
The new terms aim to promote balanced trade and enhance cooperation between the two countries. The White House stated that the agreement supports fair market access and long-term economic ties.
Shift in Energy Strategy and Russian Oil Commitments
Prime Minister Modi confirmed that India will stop purchasing oil from Russia. He said India will now focus on energy trade with the United States and other non-sanctioned sources such as Venezuela.
This move follows increasing pressure from US officials to reduce dependence on Russian energy amid global tensions. Modi’s statement marked a clear policy change and signals stronger alignment with the United States.
The US Energy Department said it would work with Indian firms to ensure stable energy supplies. It also announced plans to send trade delegations to India in the coming weeks to explore new opportunities.
Markets React with Gains Across Major Indices
US equity markets responded positively to the trade news. The S&P 500 rose 0.7%, closing near its all-time high, while the Nasdaq climbed 0.8%. Traders noted the shift in investor sentiment as tensions eased and trade clarity returned.
Major sectors including technology, industrials, and energy saw gains. Analysts linked the rally to increased confidence in global trade stability and a reduction in geopolitical risks.
Safe-haven assets, often favored during market stress, dropped sharply. Gold prices fell by 4% to $4,660, and silver dropped over 7% to $79. The drop reflected less investor demand for risk protection.
Strategic and Economic Outcomes of the Deal
The trade agreement is expected to boost US exports across several sectors. Trump said that the deal opens more than $500 billion in future trade opportunities. The US Trade Representative’s office noted that market access would be broadened in a way that benefits American producers.
India’s commitment to shifting its oil sources is also expected to change global energy flows. This transition will create new supply chains and offer new markets for US energy exports.
The Department of Commerce said it would monitor the implementation closely and ensure fair trade practices. Both countries have agreed to meet bi-annually to review the progress of the deal and address any concerns.
