United States and India Reach Bilateral Trade Agreement with Reciprocity Measures

On February 6, 2025, the White House announced that the United States and India have formalized a framework agreement to boost bilateral trade. Under the initiative of U.S. President Donald Trump and Indian Prime Minister Narendra Modi, this agreement marks an important milestone in negotiations for a more comprehensive trade treaty between the two nations.

Key Terms of the Trade Cooperation Agreement

The new agreement includes significant tariff reductions by India on U.S. industrial products, food, and agricultural goods. Both parties have committed to expanding preferential market access in sectors of mutual interest, thereby strengthening bilateral trade relations. The joint statement highlights that India will proceed to eliminate or reduce tariffs on a wide range of goods originating from the U.S., facilitating greater flow in trade exchanges.

Reciprocal Tariff Structure and Affected Products

In turn, the United States will implement an 18% reciprocal tariff on goods imported from India. This measure covers a broad spectrum of products: textiles and apparel, leather goods and footwear, plastics and rubbers, organic chemical compounds, home decor, traditional crafts, and various machinery equipment. The agreement thus establishes a balanced mechanism where both economies share responsibilities in opening markets.

Implications of the Bilateral Trade Framework

This reciprocity structure aims to ensure that trade between both countries is mutually beneficial, allowing U.S. companies to access new opportunities in the Indian market while protecting certain Indian industrial sectors. The agreement represents a strategic step in the trade relations between two major economies, demonstrating both nations’ commitment to strengthening their economic ties through direct bilateral negotiations.