Insights 
VT 
The US and India are nearing an agreement to reduce tariffs on Indian exports from 50% to 15–16%. India might also incrementally decrease Russian oil imports and permit some genetically modified corn and soymeal imports.
Currently, the USD/INR exchange stands at 88.90, showing a slight decrease of 0.09%. Tariffs are customs duties levied on imports to give local producers a competitive edge, often used alongside trade barriers.
Taxes and Tariffs
Taxes and tariffs differ as tariffs are prepaid at entry points, targeting importers, whereas taxes are paid during purchases. Economists debate tariffs; some believe they protect local industries, while others warn of potential long-term price hikes and trade wars.
Donald Trump aims to employ tariffs during his presidential campaign to bolster the US economy. In 2024, Mexico, China, and Canada made up 42% of US imports, with Mexico leading at $466.6 billion, as per US Census Bureau data. Trump plans to target these three countries with tariffs and use the revenue to reduce personal income taxes.
This potential trade deal is a significant development for the Indian Rupee. We have already seen the USD/INR pair react by moving lower to 88.90, and a confirmed deal could push the Rupee to its strongest levels this year. Traders should consider positions that benefit from a stronger Rupee, as the current tariff structure has been a major drag on the currency.
Beyond the currency market, this news is bullish for Indian equities, particularly for export-oriented sectors like information technology and manufacturing. The Nifty 50 index has already rallied over 4% in October 2025, partly on rumors of this deal, pushing past levels not seen since the volatility following the US election last year. Lower implied volatility on Indian stock indices could make buying call options an attractive strategy.
Commodity Market Implications
The mention of India potentially reducing Russian oil imports while allowing in US agricultural products has implications for commodity traders. A shift away from Russian oil could increase Indian demand for Brent crude, providing a new source of support for global oil prices, which have been hovering around $95 per barrel. The opening of the Indian market to US GMO corn and soymeal could also impact agricultural futures.
We must view this development in the context of the tariff plans discussed during the 2024 US presidential election. While the focus then was on imposing broad tariffs, this potential deal with India suggests a more strategic and less confrontational approach than many had anticipated. Looking back at the market volatility caused by the tariff disputes of 2018-2019, this shift in policy is a notable de-escalation of trade risk.
For the coming weeks, the main focus will be on any official confirmation of the agreement. Since the deal is not yet final, uncertainty remains, creating opportunities for strategies that profit from volatility, such as straddles on the USD/INR pair. The Reserve Bank of India’s last monetary policy statement on October 9, 2025, highlighted a commitment to managing volatility, so we should also watch for central bank actions if the Rupee moves too quickly.
