Background to the Tariff Decision
US Lifts Additional Tariff After India’s Energy Policy Shift: The United States officially lifted the additional 25% tariff imposed on Indian goods in early February 2026. This decision followed India’s policy commitment to discontinue imports of Russian Federation oil, both directly and indirectly. The move marked a significant de-escalation of trade tensions that had persisted for several months.
The tariff had raised the cost of Indian exports in the US market, affecting multiple sectors. Its withdrawal restores normal trade conditions and signals a broader economic recalibration between the two countries.
Static GK fact: Tariffs are taxes imposed on imported goods to protect domestic industries or influence foreign policy behaviour.
Why the 25% Tariff Was Imposed
The additional duty was originally imposed during the presidency of Donald Trump. The US administration argued that India’s continued purchase of discounted Russian crude during the Ukraine conflict indirectly supported Moscow’s war finances. As a pressure mechanism, Indian exports were subjected to sharply higher duties.
This decision placed India among a limited group of countries facing punitive trade measures linked to geopolitical concerns rather than purely economic disputes.
Static GK Tip: Energy trade has increasingly become a tool of diplomacy, especially during global conflicts involving major oil producers.
Conditions for Tariff Withdrawal
Under the executive order issued in February 2026, India formally committed to halting Russian oil imports. In exchange, the US agreed to roll back the additional 25% tariff with effect from 12:01 am Eastern Time. The agreement extended beyond trade and included a framework for 10-year defence cooperation.
This reflected a shift from transactional trade negotiations toward long-term strategic alignment. Defence procurement, joint exercises, and technology sharing were highlighted as future areas of cooperation.
Reduction in Reciprocal Tariffs
Alongside the removal of the extra duty, the agreement reduced reciprocal tariffs on Indian goods to 18%. Earlier, these tariffs stood at 25% and had peaked near 50% in late 2025. The reduction significantly improves price competitiveness for Indian exporters in the US market.
The revised tariff structure is expected to stabilise bilateral trade volumes and encourage long-term supply contracts across sectors.
Static GK fact: Reciprocal tariffs refer to matching import duties imposed in response to another country’s trade barriers.
India’s $500 Billion Purchase Commitment
A central feature of the deal is India’s pledge to purchase $500 billion worth of US goods over the next five years. The basket includes energy products, aircraft and aircraft parts, advanced technology items, precious metals, and coking coal. Select aviation components were also exempted from tariffs.
These purchases are expected to reduce India’s energy import risks while strengthening US export volumes.
Impact on Bilateral and Global Trade
The new 18% tariff rate gives Indian exporters a marginal edge over competitors facing 19–20% duties. Trade analysts expect improved export growth, reduced uncertainty, and renewed investor confidence. The agreement also reinforces political ties between Narendra Modi and the US leadership.
Overall, the decision signals a reset in India–US economic relations with long-term strategic implications.
Static Usthadian Current Affairs Table
US Lifts Additional Tariff After India’s Energy Policy Shift:
| Topic | Detail |
| Tariff removed | Additional 25% duty on Indian goods |
| Announcement date | February 7, 2026 |
| Key condition | India to stop Russian oil imports |
| Revised tariff rate | 18% reciprocal tariff |
| Purchase commitment | $500 billion over five years |
| Major sectors | Energy, aviation, technology, defence |
| Strategic aspect | 10-year defence cooperation framework |
| Trade impact | Improved competitiveness of Indian exports |
