Moody's cites Russian crude uncertainty in US trade pact

The US-India interim trade pact eases tariff pressures on exports to America but leaves significant uncertainties over Russian crude oil imports and large-scale US purchase commitments by New Delhi, Moody's said in a note.

Under the deal announced earlier this month, the US will drop its base tariff rate on Indian goods to 18% from 50%. The effective tariff rate is expected to fall to around 15% after exemptions, from an estimated 25% previously.

The Trump administration had slapped the 50% tariffs in response to India's continued purchases of Russian crude.


While the reduction provides relief to Indian exporters, Moody's said the agreement rests on assumptions that remain unconfirmed. In particular, Indian officials haven't corroborated US claims that New Delhi has committed to phasing out imports of Russian oil.

Moody's highlighted that India's commitments under the interim trade agreement appear more significant than those of the US. India has agreed to eliminate or sharply reduce tariffs on all US industrial goods and to lower barriers for a wide range of American agricultural and food products, including oilseeds, animal feed and alcoholic beverages.

The US is India's largest export destination, accounting for nearly 18% of total outbound shipments.

The 50% tariff, which took effect in late August, affected key sectors such as textiles, gems and jewellery, and marine products.

Exports to the US fell 13% year-on-year in September - the sharpest decline since June 2023. However, the impact on overall exports was relatively contained. Pharmaceuticals, semiconductors, and minerals - major US-bound export categories that were exempted from the tariff hikes - helped cushion the blow.

Frontloading of shipments ahead of the tariff increase also supported annual figures. Exports to the US rose 14% in calendar 2025, while total exports grew 0.8%, compared with a 2.6% growth in 2024.

The trade deal follows India's free trade agreement with the European Union concluded in January. Given that the EU accounts for about 17% of India's exports, tariff reductions there could offset some of the losses from higher US duties, though Moody's cautioned that such gains would materialise gradually.