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What is the US-India trade deal?
The US-India trade deal is an agreement announced in early February 2026 that reduces US tariffs on Indian goods from 50% to 18%. India also agreed to lower tariffs on US industrial and agricultural products and commit to purchasing $500 billion worth of US goods over five years. The deal aims to boost bilateral trade and improve economic ties.
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Why does the US-India trade deal matter?
This deal is significant because it can reshape trade relations between the two largest democracies, potentially influencing global supply chains and economic stability. It also signals a move towards more open trade, but raises questions about geopolitical strategies, especially regarding India’s imports of Russian oil and domestic political debates.
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How does the tariff reduction impact global trade?
Reducing tariffs from 50% to 18% makes Indian goods cheaper in the US and vice versa, encouraging more trade. It can also pressure other countries to negotiate similar deals. However, some industries worry about increased competition, and the overall impact depends on how both countries implement and enforce the agreement.
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What are the domestic debates in India about this deal?
In India, the deal faces opposition from farmers and unions concerned about exposure to US and other foreign competition, especially in agriculture sectors like pulses and dairy. Critics also question transparency and the long-term benefits of the agreement, leading to protests and political debates within India.
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How are US and Indian interests balancing in this agreement?
The deal reflects a balancing act: the US seeks to expand its exports and reduce trade deficits, while India aims to boost economic growth and secure its energy needs, including Russian oil. Both countries are also navigating geopolitical considerations, with India maintaining its strategic independence and the US trying to strengthen alliances in Asia.