On Monday night, February 2, US President Donald John Trump announced on his social media platform, Truth Social, that the United States had reached a trade deal with India following a phone conversation with Prime Minister Narendra Modi. Trump claimed that India would purchase over $500 billion worth of US goods, while the US would immediately reduce its so-called reciprocal tariff on Indian products from 25% to 18% – later clarified as a cut from 50% to 18%.
The announcement, however, was dramatic in tone and came at a time when the name of our Prime Minister appeared in the Epstein files and his corporate associate Anil Ambani was also in the spotlight. While it generated headlines, it raised more questions than it answered. Rather than being swayed by how the Godi Media and supporters of our self-proclaimed Vishwaguru are portraying it, it is important to examine what India has actually gained in real terms.
This article seeks to unpack the India-US trade deal, which is filled with grand claims and, in turn, gives rise to even larger unanswered questions.
The $500 Billion Question
At present, India’s annual imports from the US including goods and energy are under $50 billion. Even under optimistic assumptions, reaching $500 billion would take more than two decades, indicating that this figure is more a long-term aspiration than a near-term contractual commitment.
Trump’s post did not specify timelines, annual targets, or sector-wise commitments, making it difficult to assess whether this is a binding agreement or merely a political signal.
Tariff Cuts: What’s Real Vs. the False Claims
Trump claimed that India had agreed to reduce tariffs and non-tariff barriers to zero on US products. However, he did not clarify which products are covered?Whether sensitive sectors are included?How non-tariff barriers will be dismantled?
India has historically resisted opening up areas such as food grains, genetically modified products, and heavily regulated agricultural imports. Without clarity, the zero-tariff claim remains speculative.
However, even after the deal, key US Section 232 tariffs remain untouched:Steel, aluminium, copper: 50% and certain auto components: 25%.
At the same time, zero tariffs will continue for pharmaceuticals, aircraft and parts, and select electronic and mechanical components.
The US has already offered reciprocal tariffs to several countries:UK: 10%, EU & Japan: 15%, Indonesia & Malaysia: 19%, and Bangladesh & Vietnam: 20%.
These tariffs sit above MFN (Most Favoured Nation) rates, except in the EU’s case, where a cap mechanism applies. India’s 18% rate fits within this global pattern and does not represent special treatment.
Russian Oil and Strategic Trade Shifts
Trump also claimed that Prime Minister Modi agreed to stop buying Russian oil and increase energy purchases from the US and Venezuela. If true, this would represent a significant geopolitical and economic shift, though India has not officially confirmed such a commitment. However, this could be agreed on the garb of his name or references appearing in the above said Epstein Documents, yet what goes behind the curtain is still not known, it can be a simple assumption, how things work these days in the market be it local or global.
Soon after this announcement was made in the media, there seemed a sense of celebration about it. However, Ajay Srivastava, founder of the Global Trade Research Initiative, has called it to be naïve and premature thing. He went on to caution against this premature celebration. Until there is a joint statement, negotiated legal text, and clarity on enforcement mechanisms, the announcement should be seen as a political declaration rather than a finalised trade deal. So, instead of singing the same tune as heard and said on the Godi Media, it is fair to wait and watch and then frame this opinion of gala times.
However, in contrast, the India-EU Trade Agreement has a different story. Unlike the US announcement, the India-EU Free Trade Agreement is far more concrete and comprehensive. On the contrary, 23% of global GDP and 25% of the world’s population, it is rightly being called India’s most ambitious trade deal.
The EU will eliminate or reduce tariffs on 98% of Indian exports, benefiting labour-intensive sectors such as textiles and garments, footwear and leather, marine products, gems and jewellery, and handicrafts, chemicals, and machinery.
These sectors currently face stiff competition from countries like Vietnam and Bangladesh, which already enjoy zero-tariff access to the EU.
Timing Remains a Challenge
While the EU deal is promising, it will take at least a year to be fully implemented due to legal vetting and ratification by all 27 EU parliaments. Meanwhile, Indian exports to the US have already fallen 22% between May and December 2025 due to high tariffs. Exports to the rest of the world, however, have grown by 5.5%, indicating gradual diversification.
However, on the other side, the world in trade seems to be in turmoil. Global trade uncertainty continues to rise, largely driven by WTO-inconsistent US tariffs and excessive dependence on China for manufacturing. With China producing over 80% of the world’s smartphones and laptops, supply-chain concentration remains a major risk.
While India has the market size to emerge as an alternative manufacturing hub, its higher cost of doing business compared to China and Southeast Asia remains a key obstacle.
Signal, Not Settlement
Trump’s trade announcement with India may sound impressive at first glance, but on closer examination, it lacks the detail, structure, and legal foundation of a genuine trade agreement. The headline figures appear more aspirational than actionable, tariff reductions remain ambiguously defined, and the scale of India’s alleged commitments has not been verified through any official or jointly released documentation. Without clarity on timelines, product coverage, enforcement mechanisms, or reciprocal obligations, such declarations remain political signalling rather than binding economic policy.
Until formal texts are negotiated, signed, and made public, India would be well advised to respond with caution rather than celebration. In sharp contrast, the India-EU trade deal reflects a serious, well-negotiated framework – one that is ambitious yet balanced, legally grounded, and aligned with economic realities. It demonstrates how meaningful trade agreements are built on transparency, accountability, and mutual benefit, not headline-driven rhetoric.
[MohdZiyauallah Khan is a freelance content writer & editor based in Nagpur. He is also an activist and social entrepreneur, co-founder of the group TruthScape, a team of digital activists fighting disinformation on social media.]