Early morning sharp surge! Trump makes a major announcement!

2026-02-03 23:46:17

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The United States and India Reach a Major Agreement

On February 2nd, local time, U.S. President Trump announced that the “reciprocal tariffs” on India would be reduced from 25% to 18%. India will correspondingly lower tariffs and non-tariff barriers on U.S. goods until they reach zero, and has committed to purchasing over $500 billion worth of U.S. energy and other products. As a result, Indian ETFs listed in the U.S. (iShares MSCI India ETF) surged sharply during trading, rising nearly 4% at one point; the Indian rupee against the U.S. dollar also appreciated significantly, rising over 1% intraday.

Analysts pointed out that this agreement marks a significant turning point in U.S.-India trade relations. The deal is expected to open a new chapter in bilateral trade and influence the global energy market landscape. However, some institutions questioned the feasibility of Trump’s claims, noting that given the scale of U.S.-India trade, it is unlikely to fully realize the terms announced.

Trump Announces

According to CCTV News, early morning on February 3rd Beijing time, U.S. President Trump posted on the social media platform “Truth Social” that he had a phone call with Indian Prime Minister Modi earlier that morning.

Trump stated that the two sides had reached a U.S.-India trade agreement, with the so-called “reciprocal tariffs” on Indian goods being reduced from 25% to 18%, effective immediately.

On the same day, Modi posted on social media confirming that the U.S. agreed to lower India’s import tariffs to 18%.

Specifically, India made the following commitments:

India agreed to reduce tariffs on U.S. products and non-tariff barriers, aiming to bring them down to 0;
India agreed to stop purchasing Russian oil and instead buy more oil from the U.S., with the possibility of purchasing Venezuelan oil in the future;
India agreed to buy U.S. goods at higher levels and committed to purchasing over $500 billion worth of energy, technology, agricultural, coal, and other products from the U.S.

Following this, during U.S. stock trading, the iShares MSCI India ETF surged sharply, rising nearly 4% at one point, ultimately closing up 2.98%. Indian Gift Nifty stock index futures also expanded their gains to 3.8%.

Trump wrote on social media: “Out of friendship and respect for Prime Minister Modi, and at his request, we immediately agreed to a trade deal between the U.S. and India. Our incredible relationship with India will become even stronger in the future.”

Major Changes in the Oil Market

As background, trade tensions between the U.S. and India escalated last July, when Trump announced a 25% tariff on Indian imports. A few days later, on August 6th, he announced an additional 25% tariff on all Indian goods due to India’s purchase of Russian oil, bringing the total tariff to 50%. However, Indian pharmaceuticals (which account for half of the U.S. generic drug market) and consumer electronics exports were exempted.

Trump and Modi’s posts also indicated that the 25% “Russian oil tariff” had been canceled.

It remains unclear how this new agreement will be implemented.

Sources familiar with the matter revealed that last year, the U.S. threatened tariffs on India for purchasing Venezuelan oil, but now the U.S. has informed India that it can soon resume relevant purchases to replace some of the imported Russian oil.

These sources said that after the U.S. imposed tariffs related to India’s Russian oil purchases, India committed to significantly reducing its Russian crude oil imports, and in the coming months, India’s daily imports of Russian oil could decrease by hundreds of thousands of barrels.

India’s Oil Minister Hardeep Singh Puri stated last week that as Russian oil imports decline, India is promoting diversification of crude oil sources.

According to data from trade data provider Kpler, even after the 50% tariff was implemented in August last year, India still imported about 1.5 million barrels of Russian oil daily.

According to U.S. Commerce Department data, in the first 11 months of last year, U.S. imports from India were valued at $95.5 billion, accounting for 3% of total import value, while exports to India during the same period slightly exceeded $40 billion.

Over a week ago, at the Davos World Economic Forum, Trump expressed confidence in the bilateral trade agreement between India and the U.S. When asked about the India-U.S. trade deal on January 21, Trump said: “I have great respect for your Prime Minister. He is a wonderful person and my friend. We will reach a good agreement.”

Last week, U.S. Trade Representative Katherine Tai praised India’s trade agreement with the EU in an interview, stating that India has an advantage in the deal.

Tai pointed out that India, with its low-cost labor and growing manufacturing base, has a competitive edge and will have more opportunities to access the European market.

After Trump’s statement, some analysts questioned whether the scale of U.S.-India trade makes it difficult to fully realize the terms Trump claimed. Pratik Dattani, founder of the Indian think tank Bridge India, noted that India only purchased $41.5 billion worth of goods from the U.S. last year, making it impossible to reach $500 billion, especially considering Trump’s focus solely on merchandise trade.

Nicolas Khler-Suzuki, a trade and economic security advisor at the French think tank Jacques Delors Institute, also believed that given India’s past two decades of trade negotiation practices, Trump’s claim that the country would reduce all tariffs to zero is highly unlikely, particularly in the agricultural sector.

(Source: Securities Times)

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