U.S.– India Trade Deal | Phase 1 Update

On Feb. 3, Clark Hill described the U.S. – India tariff “reset” as a big commercial signal with thin operational detail. Several days later, the picture is now sharper. The White House issued a Joint Statement laying out a framework for an “Interim Agreement,” and the President signed an Executive Order, effective Feb. 7, that removes the separate 25 percent duty on imports from India tied to India’s purchases of Russian oil.

De-escalation remains the headline, as the United States also lowers reciprocal tariffs on imports from India to an 18 percent reciprocal rate, and India commits to broad tariff and non-tariff barrier reductions. Attention now turns to what companies should do at the border and how “Phase 1” of the U.S.-India deal interacts with India’s parallel, rules-based deal with the European Union.

Key Takeaways

• The Joint Statement is the first official non-binding document for the Interim Agreement, it spells out product coverage, market-access priorities, rules-of-origin intent, and a 5-year, $500 billion purchase ambition.
• The Executive Order creates immediate border consequences. As of February 7, it terminates the additional 25 percent duty on imports from India, imposed in 2025, and it sets up monitoring and a potential tariff snapback if Russian oil purchases resume.
• Includes certain exceptions to the 232 tariffs on aircraft, aircraft parts, and auto parts.
• Rather than “free trade,” this deal allows for managed access with a new tariff baseline and conditions.
• Europe’s trade negotiations with India remain important. The EU–India FTA is slower and more structured, built around schedules and rules of origin, and not yet in force. Companies that sell into the U.S. and EU markets should account for differing trade structures.

What Changed Since Last Week

Since last week’s White House announcement, three developments materially change how companies should read the U.S.-India deal. First, while not the final legal text, the Interim Agreement framework set up by the Joint Statement is specific enough to shape commercial planning.

Second, the Executive Order converts the oil-related condition into an operational border change with an effective date and a defined tariff mechanism.

Third, early reactions in both markets and boardrooms have shifted from “is this real” to “how fast will it be implemented, and who gets a relative advantage.”

The Joint Statement: What It Says, and What It Does Not

The Joint Statement describes a framework for an Interim Agreement on reciprocal and mutually beneficial trade, anchored to the longer-running U.S. – India Bilateral Trade Agreement (BTA) negotiations. In practical terms, it tells companies what each government is prepared to offer and makes clear that the real impact will depend on how quickly and cleanly those commitments are implemented.

On India’s side, the most consequential commitment is breadth. India intends to eliminate or reduce tariffs on all U.S. industrial goods and a wide range of food and agricultural products. The list includes inputs and politically sensitive items such as dried distillers’ grains (DDGs) and sorghum for animal feed, as well as nuts, fruit, soybean oil, and alcohol products like wine and spirits.

On the U.S. side, the Joint Statement confirms the decrease to an 18 percent reciprocal tariff rate for Indian-origin goods under the existing reciprocal-tariff Executive Order framework. For Indian companies, the comparison is regional. India competes most directly with South and Southeast Asian exporters, not Europe. Against that group, a stable 18 percent reciprocal tariff rate is lower, and the now clearer market access may tilt sourcing decisions in India’s favor.

It also previews a second step; if the Interim Agreement is successfully executed, the United States would remove the reciprocal tariff on a defined set of goods listed in an “aligned partners” annex, including generic pharmaceuticals, precious gems, and aircraft parts.

Two sector-specific signals stand out for companies. The Joint Statement indicates that the United States will remove certain Section 232 steel, aluminum, and copper tariffs on aircraft and aircraft parts from India, and it contemplates a preferential tariff-rate quota for auto parts subject to Section 232. It also flags that the outcome for generic pharmaceuticals and ingredients will be contingent on the findings of the ongoing Section 232 investigation in that sector.

The Joint Statement goes beyond tariffs, contemplating long-standing non-tariff barriers. This has frustrated companies for years, particularly in medical devices, ICT products, and product testing and certification. The practical takeaway is that India has committed to move more quickly on recognizing U.S. standards in certain sectors, with decisions expected within months rather than years.

Finally, the Joint Statement flags two practical guardrails that companies should keep in mind. First, only goods originating in the United States or India are expected to benefit, highlighting the importance of sourcing and documentation for company supply chains. Second, the deal is conditional: if one side changes its tariffs, the other can respond in kind. While the relief is real, it is not unconditional, and companies should plan for that flexibility.

Executive Order: What Changes at the Border

The Executive Order signed February 6 eliminates the additional 25 percent duty that had been imposed on products of India in 2025 as a penalty tied to India’s purchases of Russian oil. The order is effective for goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern on Feb. 7, 2026.

Once Customs and Border Protection (CBP) updates its system, the extra 25 percent duty will be no more. Importers may also be eligible for refunds of duties already paid, which would be handled through standard CBP refund procedures.

The order also signals how the administration views this deal as leverage linked to energy alignment. It directs the Department of Commerce to monitor whether India resumes Russian oil imports, and it explicitly contemplates recommendations to the President to reimpose the 25 percent duty if that occurs. For businesses, that is the “snapback” concept in plain terms, the durability of the tariff relief is connected to geopolitical compliance.

Geopolitics: Why China is Part of the Subtext

One aspect of the Joint Statement that should not be overlooked; the parties commit to strengthen economic security alignment through actions that address non-market policies of third parties, alongside cooperation on investment reviews and export controls. Though the Joint Statement does not mention country names, it is clear that the third country concern which hosts the largest non-market economy is China.

Read together with the energy condition and the emphasis on supply-chain resilience, the Interim Agreement is not simply about tariffs. It is about building a preferred lane for trade and technology between two large democracies, while reducing dependence on adversarial or high-risk supply routes. That is also why the purchase list leans into energy, aircraft, critical technology inputs such as GPUs and data-center goods, and coking coal, these are strategic commodities in the current competition landscape.

What Companies Should Do Now

The disciplined approach is to treat this as live operational change. Companies should move early on analysis and contract posture but avoid hard commitments until the government publishes the remaining implementing details. Preparation will be key to make operational changes as quickly as possible once more details are finalized.

• Check your border position: Work with customs brokers to monitor CBP implementation for the February 7^th removal of the 25 percent duty, including ACE coding and any guidance on refunds.
• Be cautious about pricing: Run the numbers under different tariff scenarios, but avoid locking in lower prices until the new rates are formally effective. Adopt contract language that allows for price adjustment once the changes are official.
• Check long-term contracts: Make sure your agreements clearly spell out who bears tariff costs and how prices will be adjusted if duties change.
• Know where you are exposed: Identify which products and suppliers rely on trade from India and flag any items that could still be affected by special tariffs or exceptions.
• Get ahead of the EU track: If you plan to use EU – India trade preferences, start mapping origin and paperwork now, most of the work comes before the benefits apply.

Next Steps

In the near term, what matters most is execution, not headlines. Companies should watch for clear signals that the deal is being implemented, including customs guidance, formal tariff updates, and any official documentations that creates a binding arrangement.

At the same time, a few practical questions will shape real impact: which products qualify for better treatment, how origin rules are defined, how quickly regulatory barriers are addressed, and how the U.S. enforces the energy-related conditions tied to the deal.

Contact Clark Hill

If this development is of interest to your business or if you have questions regarding the content of this alert, please contact any member of Clark Hill’s International Trade Practice for additional details and strategic guidance.

• Mark Ludwikowski (mludwikowski@clarkhill.com; 202.640.6680)
• Kevin Williams (kwilliams@clarkhill.com; 312.985.5907)
• Kelsey Christensen (kchristensen@clarkhill.com; 202.230.9889)
• Aristeo Lopez (alopez@clarkhill.com; 202.552.2366)
• Ashley Gifford (agifford@clarkhill.com; 202.640.6655)
• Laura M. Quesada (Lquesada@clarkhill.com; 202.240.0170)
• Amal Sheheen (Asheheen@clarkhill.com; 202.552.2354)
• Onjoly Purification (Opurification@clarkhill.com; 202.552.2361)

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