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Indian rupee, stocks rally after trade deal with US
On Monday, Trump said he agreed to a trade deal with India, cutting reciprocal tariffs on Indian goods from 25 per cent to 18 per cent
- PUBLISHED: Tue 3 Feb 2026, 1:28 PM
US President Donald Trump’s move to slash reciprocal tariffs on India from 50 per cent to 18 per cent has had an overwhelmingly positive response in India. The Indian rupee strengthened sharply on Tuesday, appreciating by over one per cent, while the stock markets soared in the morning trades.
Trade relations between the two countries soured after the US President imposed stiff tariffs on Indian products and services. Trump raised import duties on Indian goods from 25 per cent to 50 per cent in August, accusing India of buying heavily discounted Russian oil, which was allegedly helping Moscow in its war in Ukraine.
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The US President’s moves against India saw the country enter into “the mother of all trade deals” with the EU last month, and India also hastily repaired ties with China.
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In a post on Truth Social on Monday, Trump said he agreed to the trade deal with India, cutting reciprocal tariffs on Indian goods from 25 per cent to 18 per cent. “Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25 percent to 18 percent,” said Trump.
Describing Modi as “a great friend and respected leader,” the US President said he had discussed trade and efforts to end the Russia–Ukraine war. “This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!"
Indian Prime Minister Narendra Modi said: "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.”
"When two large economies and the world’s largest democracies work together, it benefits the people and unlocks immense opportunities for mutually beneficial cooperation," he added.
On Tuesday, rupee climbed over 1 per cent to 90.40 per dollar in early trading.
