The White House released a joint statement on Friday, February 6th, announcing a temporary framework for the ongoing bilateral trade agreement between the United States and India. According to this framework, the two countries will mutually reduce tariffs, reshape energy relationships, deepen economic cooperation as both seek to realign global supply chains.
The governments of both countries stated in the joint statement that the framework reiterates their commitment to negotiate a broader bilateral trade agreement, while also pointing out that further negotiations are needed to finalize the agreement.
The statement read, “The temporary agreement between the United States and India will mark a historic milestone in our partnership, demonstrating the mutual commitment to pursue reciprocal and balanced trade based on common interests and tangible outcomes.”
This joint statement comes after U.S. President Trump announced on Monday that the U.S. had reached an agreement with India. Trump stated that the U.S. would reduce the import tariffs on Indian goods from 50% to 18%, while in exchange, India would cease purchasing Russian oil and lower trade barriers with the U.S.
Of the previous 50% tariff rate, half was imposed by Trump last year as a penalty against India for purchasing Russian oil, which he claimed supported Russia’s actions in Ukraine. On Friday, Trump signed an executive order to eliminate the additional 25% tariff imposed on Indian oil imports due to the purchase of Russian oil, as India had agreed to instead procure oil from the U.S. and Venezuela.
The joint statement outlined key terms of the temporary trade agreement between the U.S. and India, which include:
– India will eliminate or reduce tariffs on all U.S. industrial products as well as various American food and agricultural products, including dried distiller grains (DDGs), red sorghum for animal feed, nuts, fresh and processed fruits, soybean oil, wine, and spirits.
– The U.S. will impose an 18% tariff on most goods imported from India to the U.S., including textiles and clothing, leather and footwear, plastic and rubber products, organic chemicals, home decor items, handicrafts, and certain machinery.
– India commits to purchasing $500 billion worth of U.S. goods over the next five years, including oil, natural gas, coking coal, aircraft and aircraft parts, precious metals, and technology products.
– The U.S. and India pledge to continue providing reciprocal market access in areas of mutual interest.
– Both countries will establish rules of origin to ensure that the benefits of this trade agreement primarily accrue to the U.S. and India.
– The U.S. and India will address non-tariff barriers affecting bilateral trade. India agrees to resolve long-standing trade barriers hindering the import of U.S. medical devices; eliminate restrictive import licensing procedures that delay market access for U.S. Information and Communication Technology (ICT) products, or impose quantity limitations; and make proactive decisions regarding the use of U.S.-developed standards or international standards (including testing requirements) for market access to specific U.S. goods within six months of the agreement taking effect. India also agrees to address non-tariff barriers faced by U.S. food and agricultural products trade.
– The U.S. and India agree to enhance coordination on economic security, jointly address third-party non-market policies, and cooperate on investment screenings and export controls to strengthen supply chain resilience and innovation.
– The U.S. and India commit to resolving discriminatory or burdensome practices and other barriers in digital trade, paving the way for establishing clear and ambitious rules for reciprocal and fair digital trade.