Trump Calls India-US Trade Deal ‘Historic’ as Tariff Cuts and Coal Exports Take Centre Stage
•February 12, 2026
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Why It Matters
The deal deepens strategic economic ties between the world’s two largest democracies and opens a major market for U.S. coal and other energy exports, while reshaping tariff structures that could shift trade balances.
Key Takeaways
- •US tariffs on Indian goods cut to 18%
- •India reduces tariffs on US energy, food products
- •Deal aims to boost US coal exports to India
- •Interim pact targets $500 billion bilateral trade
Pulse Analysis
The United States and India have been navigating a volatile trade landscape since early 2025, when Washington imposed punitive tariffs of up to 50 % on Indian imports amid concerns over New Delhi’s procurement of Russian energy. Those measures strained a relationship that had previously been buoyed by strategic dialogues and shared democratic values. Over the past year, both capitals have worked to defuse the standoff, culminating in an interim framework released just days before President Trump’s remarks. The new arrangement signals a decisive shift from confrontation to cooperation, laying groundwork for a more stable bilateral trade architecture.
At the heart of the agreement is a dramatic reduction of U.S. duties on Indian products to a flat 18 % rate, covering textiles, apparel, leather, plastics, chemicals and select machinery. In return, India will lower or eliminate tariffs on a suite of American goods, notably coal, aircraft components, dried distillers’ grains, tree nuts, fruits, soybean oil and wine. By unlocking these market channels, the pact is designed to accelerate U.S. energy exports—Trump singled out coal as a flagship commodity—while giving Indian manufacturers broader access to American consumers. Analysts estimate the tariff cuts could lift bilateral trade volumes toward the $500 billion target set for 2026.
Beyond the immediate commercial gains, the deal carries geopolitical weight. Strengthening supply‑chain resilience between the two largest democracies counters growing reliance on China‑centric networks and aligns with broader Indo‑Pacific strategies. However, the surge in U.S. imports may erode India’s modest trade surplus, prompting domestic stakeholders to monitor sensitive agricultural sectors that remain protected. The interim pact is widely viewed as a stepping stone toward a comprehensive bilateral trade agreement, which, if finalized, could cement a long‑term partnership that reshapes global trade flows and energy markets.
Trump calls India-US trade deal ‘historic’ as tariff cuts and coal exports take centre stage
US President Donald Trump hailed a new India‑US trade deal as historic, anticipating a significant boost in American energy exports, particularly coal.
US President Donald Trump on Wednesday described the newly concluded India–United States agreement as a “historic trade deal”, saying it would sharply expand American energy exports, particularly coal, while deepening bilateral economic ties.
“America is now the number one energy producer in the world... We're becoming a massive energy exporter. In just the past few months, we've made historic trade deals with Japan, Korea, India, and others to increase our coal exports dramatically... The quality of our coal is supposed to be the finest anywhere in the world," Trump said at a press briefing.
His remarks came days after Washington released a framework outlining the path forward for the interim trade arrangement reached with New Delhi, which both sides see as a stepping stone toward a broader bilateral trade agreement.
Tariffs cut, market access widened
At the core of the deal is a significant reduction in US duties on Indian goods — from punitive levels of up to 50 % imposed during earlier tensions to a reciprocal tariff rate of 18 % covering sectors such as textiles, apparel, leather, plastics, chemicals, home décor and certain machinery.
In parallel, India has agreed to eliminate or reduce tariffs on a wide range of American industrial, energy and food products, including dried distillers’ grains, tree nuts, fruits, soybean oil, wine and spirits, while maintaining protection for sensitive farm and dairy sectors.
New Delhi has framed the interim pact as a calibrated, balanced step toward expanding bilateral trade to $500 billion, with zero‑duty access expected for select Indian exports such as generic pharmaceuticals, gems and diamonds once the full agreement is finalised.
From tariff standoff to interim pact
The agreement follows nearly a year of negotiations that began in February 2025 under the broader US–India Bilateral Trade Agreement process.
Talks intensified after Washington imposed steep tariffs on Indian imports — partly linked to concerns over India’s purchases of Russian energy — pushing duties as high as 50 % before the recent rollback.
Under the emerging framework, India is also expected to increase imports of US goods, including energy, aircraft and technology, as part of a multi‑year effort to expand two‑way trade, though economists have cautioned that sharply higher imports could narrow India’s current trade surplus with the United States.
Both governments view the interim arrangement as groundwork for a comprehensive deal likely to be formalised in 2026, aimed at strengthening supply chains, improving market access and stabilising trade relations between the world’s two largest democracies.
Source: ET Online
Published on Feb 12, 2026 at 08:45 AM IST
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