India-US trade deal: How 18% US tariffs give India advantage over China, Pakistan and Bangladesh? Explained
India-US trade deal: With the new tariff structure, India now enjoys a clear competitive edge over rival export economies in the region, as it faces significantly lower tariff rates compared to other countries.
President Donald Trump has announced that India and the US agreed to a trade deal under which Washington will bring down the reciprocal tariff on Indian goods to 18 per cent from the current 25 per cent. The US President announced the deal on social media following a phone call with Prime Minister Narendra Modi. Trump had in 2025 imposed 50 per cent tariffs on Indian goods, including the 25 per cent punitive tariffs for India's procurement of Russian crude oil.
Responding to Trump's Truth Social post, Prime Minister Modi said he was delighted that "Made in India products will now have a reduced tariff of 18 per cent". "Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement," PM Modi said.
How India-US trade deal beat China, Pakistan, and Bangladesh?
India now enjoys a clear edge over competing export economies in the region, as it faces lower tariff rates than many countries in South and Southeast Asia.
Under the new deal, India is among the countries subjected to some of the lowest tariffs imposed by the Trump administration, compared with major Asian economies such as China, Pakistan, Indonesia, Bangladesh and Vietnam. However, the duties on Indian exports remain marginally higher than those levied on European partners, as well as on Japan and South Korea.
Countries with higher and lower tariffs
Some of the countries facing the highest tariffs from the US include:
- Brazil: 50%
- Myanmar: 40%
- Laos: 40%
- China: 37%
- South Africa: 30%
- Vietnam: 20%
- Bangladesh: 20%
- Pakistan: 19%
- Malaysia: 19%
- Cambodia: 19%
- Thailand: 19%
Countries facing the lower tariffs from the US include:
- United Kingdom: 10%
- European Union: 15%
- Switzerland: 15%
- Japan: 15%
- South Korea: 15%
India-US trade deal: What we know so far
According to US President Trump,
- India will lower its tariffs on US exports to zero
- US will drop the reciprocal tariffs from 25% to 18%
- India will stop buying oil from Russia
- India will step up oil purchase from the US
- India may potentially starting buying oil from Venezuela
- India has committed to buying $500 billion on several American things including energy, agriculture, coal, and technology
- The deal will help stop the Russia-Ukraine war
Complete details of the trade deal are yet to be announced.
Also Read: India-US seal landmark trade pact after year-long tariff standoff: A timeline of key events
Also Read: Trump cuts tariffs on India to 18%: Check full list of US duties on other countries