President Donald Trump yesterday made a surprising announcement, pledging to lift punitive tariffs on Indian oil in exchange for India ending purchases of Russian crude. Mr. Trump said the move is intended to ease growing tensions between the two countries over India's energy ties with Russia.

After a phone call with Indian Prime Minister Narendra Modi, Mr. Trump posted that he would cut US tariffs on imports of Indian goods from 25% to 18%. He said the measure was a direct result of an agreement with Mr. Modi to stop buying Russian oil.

The step drew mixed reactions in political and economic circles. Supporters called it a diplomatic success that demonstrates US leverage over other countries' energy policies. Critics warned that such deals could set a precedent and undermine the principles of free trade.

A White House spokesman said the accord is part of a broader strategy to reduce India's dependence on Russian energy and to strengthen US-India ties. Details of the agreement, including the timetable for ending Russian oil purchases and monitoring mechanisms, have not been disclosed.

"India will move forward to reduce its tariffs and non-tariff barriers against the United States to ZERO," Mr. Trump wrote. He added that India would buy "over $500 billion dollars of US energy, technology, agricultural, coal, and many other products."

Mr. Modi confirmed the agreement on social media, saying that Indian?made goods will now carry a reduced customs rate of 18%. He did not provide further details on oil or agricultural imports, which remain key sticking points for New Delhi.

Recall that in October 2025 Mr. Trump said Mr. Modi had agreed to stop buying Russian oil. Because no firm trade pact was in place at the time, Indian refiners continued to purchase cheaper crude from Moscow. Later that month the United States imposed sanctions on major Russian oil producers Rosneft and Lukoil, which further reduced demand.

Lower tariffs could make India a more attractive alternative manufacturing hub to China. An 18% Indian tariff compares with 20% in Vietnam and roughly 19% across much of Southeast Asia.

The new duties may boost India's GDP growth by about 0.2–0.3 percentage points this year, bringing it closer to 7%. Current forecasts project growth of 6.5% in both 2026 and 2027.

The oil market showed no immediate reaction to the news.