India-US Trade Deal 2026: Tariffs Cut to 18% — Which Sectors Gain?
India and the United States have made one of the biggest changes to their trade relationship in recent years.
Under the new framework announced in February 2026, the United States reduced its reciprocal tariff on many Indian goods from 25% to 18%.
At the same time, Washington removed an additional 25% tariff linked to India’s purchases of Russian oil after India committed to stop directly or indirectly importing Russian oil. For Indian exporters, this was a major relief. However, the tariff story did not end there.
In July 2026, the United States announced a separate 10% Section 301 tariff on India and several other trading partners as part of action related to forced-labour import restrictions. Some products are exempt from this additional duty.
So, what exactly changed? Which Indian industries could benefit from the India-US trade deal? And what does the new 10% tariff mean for exporters?
Here is a simple explanation.
What Is the India-US Trade Deal 2026?
India and the United States announced a framework for an Interim Agreement on reciprocal and mutually beneficial trade in February 2026.
The agreement is part of wider negotiations toward a Bilateral Trade Agreement between the two countries. Under the framework, India agreed to reduce or remove tariffs on a range of American industrial and agricultural products.
Meanwhile, the United States agreed to provide improved tariff treatment for several categories of Indian exports.The most important number for Indian businesses is:
18%.
The US reciprocal tariff on originating Indian goods was reduced from 25% to 18%.
Why Were Indian Goods Facing Tariffs of Around 50%?
Before the February agreement, two major tariff measures were affecting India.
First, Indian products faced a 25% reciprocal tariff. In addition, the United States had imposed another 25% duty connected to India’s imports of Russian oil. Together, these measures created tariff pressure of roughly 50% on affected goods.
However, the two duties had different legal and policy bases. Therefore, describing them simply as one 50% tariff would be misleading.
Why Was the Additional 25% Tariff Removed?
The White House said India had committed to stop directly or indirectly importing Russian oil.
India also represented that it would purchase US energy products and made additional commitments involving defence cooperation. As a result, President Donald Trump ordered the additional 25% duty removed effective February 7, 2026. That immediately reduced one major source of tariff pressure on Indian exporters.
What Is the New 18% US Tariff on Indian Goods?
Under the trade framework, the United States lowered its reciprocal tariff on India from 25% to 18%.
However, this does not mean every product exported from India automatically faces exactly the same total tariff.
Different products can be affected by:
- Normal customs duties
- Reciprocal tariffs
- Section 301 tariffs
- Section 232 tariffs
- Product-specific exemptions
- Preferential treatment under the agreement
Therefore, exporters should check the tariff classification applicable to their individual products.
Which Indian Products Are Covered by the 18% Rate?
The US-India joint statement specifically identifies several categories of originating Indian goods under the 18% reciprocal tariff framework.
These include:
- Textiles and apparel
- Leather and footwear
- Plastic and rubber products
- Organic chemicals
- Home décor
- Artisanal products
- Certain machinery
Meanwhile, some other products could receive different treatment as the interim agreement is implemented.
Which Indian Sectors Could Benefit?
Several export-heavy industries could benefit from the reduction in the reciprocal tariff.
1. Textiles and Apparel
India’s textile and garment industry is highly dependent on international markets. Therefore, reducing the reciprocal tariff from 25% to 18% improves the tariff position compared with the previous rate.
The joint statement specifically includes textiles and apparel among the Indian products covered by the 18% framework. This could particularly matter for exporters competing on price.
2. Leather and Footwear
Leather and footwear are also explicitly included. These industries employ large numbers of workers in India and depend heavily on export competitiveness.
Therefore, lower reciprocal tariffs could provide some relief.
3. Gems and Diamonds
Gems and diamonds receive different treatment.
The US-India framework says that, subject to successful conclusion of the Interim Agreement, the United States will remove the reciprocal tariff on a wider range of products identified for aligned partners, including gems and diamonds.
That makes this an important sector to watch as negotiations continue.
4. Pharmaceuticals
Pharmaceuticals are another significant area.
The agreement identifies generic pharmaceuticals among products that could receive removal of the reciprocal tariff subject to successful conclusion of the Interim Agreement.
However, pharmaceutical products can also be affected by separate US trade and national-security measures. Therefore, Indian pharma companies need to follow product-specific developments rather than assuming all pharmaceutical exports are tariff-free.
5. Engineering and Machinery
Certain machinery is explicitly included in the 18% reciprocal tariff framework. India also received concessions involving certain aircraft and aircraft parts.
Consequently, engineering exporters could benefit differently depending on their product category.
What Is the New 10% Section 301 Tariff?
This is where the situation becomes more complicated.
In July 2026, the US Trade Representative announced final action following investigations into whether major trading partners adequately prohibit imports produced using forced labour. USTR investigated 60 economies, including India. Following those investigations, the United States introduced additional Section 301 tariffs of 10% or 12.5%, depending on the economy. India was placed in the 10% category.
Why Is India Facing the 10% Tariff?
The Section 301 action concerns how countries deal with imports made using forced labour. USTR said India was among the economies covered by its investigation. The final July action places India among countries subject to a 10% Section 301 duty under the forced-labour trade measure. However, the measure contains important exemptions.
Does the 10% Tariff Apply to Every Indian Product?
No.
This distinction is important. USTR says the Section 301 action contains exemptions for several categories, including certain raw materials, products that could cause wider economic disruption, products unavailable in sufficient quantities in the United States, and other specified goods. In addition, articles already subject to certain Section 232 tariffs are excluded from this particular action. Therefore, Indian exporters should not simply calculate:
18% + 10% = 28% on everything.
The actual tariff depends on the product and applicable US customs classification.
Is the New 10% Tariff Part of the India-US Trade Deal?
No.
The two measures should be treated separately. The 18% reciprocal tariff comes from the US-India trade framework announced in February. The 10% Section 301 action announced in July relates to US concerns about forced-labour import prohibitions across dozens of trading partners. This distinction will make your article much more accurate than many simplified reports.
What Does the Deal Mean for Indian Exporters?
The February agreement improved India’s position significantly compared with the tariff environment immediately before it. The removal of the Russia-related 25% duty was particularly important.
Meanwhile, reducing the reciprocal tariff from 25% to 18% also lowers the burden on covered Indian goods. However, the July Section 301 action introduces another layer of complexity.
As a result, exporters now need to check:
- Their HS product classification.
- The normal US tariff applicable to the product.
- Whether the 18% reciprocal tariff applies.
- Whether the product qualifies for an exemption.
- Whether the 10% Section 301 duty applies.
- Whether a separate Section 232 measure applies.
Therefore, businesses should calculate tariffs at the product level rather than relying on headline tariff rates.
What Does India Give the US in Return?
The agreement is not one-sided.
India has agreed to eliminate or reduce tariffs on a range of American products.
These include US industrial goods and agricultural products such as:
- Tree nuts
- Fresh and processed fruit
- Soybean oil
- Red sorghum for animal feed
- Dried distillers’ grains
- Wine and spirits
India also agreed to address certain non-tariff barriers involving areas such as medical devices and ICT goods.
Therefore, the agreement aims to increase market access in both directions.
Is the India-US Trade Deal Final?
Not entirely.
The February announcement established a framework for an Interim Agreement while the two countries continue working toward a broader Bilateral Trade Agreement. Several tariff concessions are also conditional on successful conclusion of the Interim Agreement.
Therefore, businesses should expect further changes. This also makes the topic ideal for an evergreen Media4News page that can be updated whenever India and the US announce another trade development.
FAQs
What is the US tariff on India in 2026?
The United States lowered its reciprocal tariff on originating Indian goods from 25% to 18% under the February trade framework. However, other product-specific tariffs and the separate Section 301 measure can also apply.
Did the US remove the additional 25% tariff on India?
Yes. The additional 25% tariff connected to Russian oil purchases was removed effective February 7, 2026.
Why did the US remove the 25% tariff?
The White House said India committed to stop directly or indirectly importing Russian oil and had taken other steps aligning with US economic and national-security priorities.
Is there a new 10% tariff on India?
Yes. India is included in the 10% category under USTR’s July 2026 Section 301 forced-labour action. However, exemptions apply to certain products.
Are Indian pharmaceuticals exempt from US tariffs?
The trade framework provides a path toward removing reciprocal tariffs on generic pharmaceuticals subject to successful conclusion of the Interim Agreement. However, other trade measures can still affect pharmaceutical products.
Which Indian industries could benefit from the trade deal?
Textiles, apparel, leather, footwear, machinery, gems and diamonds, pharmaceuticals and several other export categories could benefit, although the treatment differs by product.
Summary
The India-US trade deal in 2026 has significantly changed the tariff environment for Indian exporters. The United States removed the additional 25% Russia-related tariff and reduced its reciprocal tariff on India from 25% to 18%. That provides relief for important Indian export industries, particularly sectors such as textiles and apparel, leather and footwear, and certain machinery.
However, exporters now face another complication: the separate 10% Section 301 forced-labour tariff, which was announced in July and includes product exemptions. Therefore, the headline “US tariff on India is 18%” tells only part of the story.
For Indian businesses, the actual impact will depend on what they export and which tariff rules apply to that specific product.