February 5th, 2026 – The U.S. and India said Monday that they have reached a trade agreement following a months-long dispute, a breakthrough that will see Washington reduce tariffs on Indian goods from 50% to 18%. As part of a major concession, India also confirmed it would halt its purchases of Russian oil.
Indian Prime Minister Narendra Modi described the deal as a win for both nations, emphasizing that cooperation between the two countries creates meaningful benefits for their people while opening the door to significant new opportunities for mutually beneficial growth.
The agreement follows lengthy negotiations aimed at resolving a trade stalemate that had sharply disrupted shipping flows, cutting India’s imports into the U.S. East Coast by more than 30%. While full details of the deal have not yet been released, including exactly when the lower tariffs will take effect, the U.S. said it will reduce a reciprocal tariff on Indian goods from 25% to 18% and remove an additional 25% punitive tariff tied specifically to India’s purchases of Russian oil.
With the tariff burden easing, Indian-made goods such as textiles and apparel are expected to regain competitiveness compared with other Asian sourcing markets, raising expectations for stronger trade activity between India and the U.S.
Industry participants are already anticipating a recovery in shipping demand. One executive at a European ocean carrier called the agreement a major development for India-U.S. trade and said carriers are hopeful for a rebound in capacity demand.
Westbound volumes along the trade lane have faced sustained pressure amid tariff uncertainty, forcing ocean carriers to lower rates to recent lows. To manage supply and demand, carriers have also adjusted capacity through blank sailings in an effort to keep the market balanced.
Imports from India into the U.S. East Coast fell 32% after the dispute began, dropping from 93,160 TEUs in August to 63,590 TEUs in December [according to PIERS].
Freight pricing has also weakened significantly. Spot rates from India to the U.S. East Coast that were $2,640 per FEU on August 1st declined steadily to $1,212.50 as of January 30th, a 54% drop, according to Platts.
Carriers, meanwhile, have struggled to sustain planned rate increases in recent months as demand support failed to materialize.
