The New Delhi Accords are signed
Tariffs are falling. Retail margins are breathing again. For the last year, the China Plus One strategy was a defensive crouch. Today, it became a growth engine. The trade agreement announced on February 2, 2026, marks a seismic shift in the global supply chain architecture. US President Donald Trump and Indian Prime Minister Narendra Modi have finalized a deal that slashes reciprocal tariffs from 25 percent to 18 percent. This is not just a diplomatic win. It is a tactical relief valve for a retail sector that has been suffocating under punitive duties since mid 2025.
The Quid Pro Quo of Global Trade
The deal is transactional. It is cynical. It is effective. India has agreed to immediately cease all purchases of Russian oil. In exchange, New Delhi secures a preferential 18 percent tariff rate on its exports to the United States. This effectively rescinds the 25 percent penalty duty imposed in August 2025. Prime Minister Modi has also committed to a staggering $500 billion investment in American energy, technology, and agriculture. Per reports from Reuters, the United States will now facilitate India’s access to Venezuelan oil alongside domestic American crude. This reshuffling of energy flows is the lubricant for the manufacturing pivot. Retailers with deep Indian manufacturing exposure are the immediate beneficiaries.
Walmart and the Ten Billion Dollar Goal
Walmart is the vanguard. The Bentonville giant has been aggressively de-risking from East Asia for years. CEO Doug McMillon has repeatedly reaffirmed a commitment to source $10 billion in Indian goods annually by 2027. This is not a vague aspiration. It is a logistics mandate. Walmart’s majority stakes in Flipkart and PhonePe provide a data-rich ecosystem that its competitors lack. By leveraging these platforms, Walmart is integrating Indian micro-enterprises directly into its global supply chain. The reduction in tariffs to 18 percent provides an immediate margin buffer of 700 basis points compared to the previous regime. This allows Walmart to maintain its price leadership in apparel and home goods without sacrificing the bottom line. Financial analysts at Bloomberg suggest this deal could add significant earnings per share to Walmart’s fiscal 2026 outlook.
Amazon and the Export Flywheel
Amazon is moving faster than the markets expected. The company recently disclosed that its Global Selling program in India has already surpassed $20 billion in cumulative exports. This milestone was reached two years ahead of the original 2025 target. Amazon is now aiming for $80 billion by 2030. The technical mechanism here is the digitization of small and medium enterprises. Amazon provides the logistics, the compliance, and the storefront. India provides the manufacturing scale. With the new 18 percent tariff cap, the landed cost of Indian electronics and textiles on Amazon.com becomes highly competitive against domestic and Chinese alternatives. The market responded with conviction. Amazon shares rose over 2 percent in mid-day trading as investors priced in the reduced friction of its cross-border operations.
US-India Trade Re-Alignment: Tariff Impact and Sourcing Projections
Target and the Recovery Play
Target has had a difficult year. The stock fell 31 percent in 2025 as it struggled to absorb cost pressures from the previous tariff hikes. Unlike Walmart, Target’s supply chain was more concentrated and less agile. Today’s deal is a lifeline. Target is currently reconfiguring its sourcing for owned brands, specifically in the softlines category which includes apparel and bedding. These sectors were hit hardest by the 50 percent duties. The reduction to 18 percent allows Target to stabilize its pricing strategy. The company is also investing $5 billion in capital expenditures through 2026 to enhance its fulfillment infrastructure. This includes a major expansion into digital wages for its international suppliers, a move designed to ensure long-term supply chain stability in the Indian market.
Market Response and Technical Data
The equity markets are not waiting for the ink to dry. Retail and manufacturing stocks with Indian ties saw immediate volume spikes. The iShares MSCI India ETF (INDA) rallied 3.3 percent. Major US retailers followed suit. The following table illustrates the market reaction as of the close on February 2, 2026.
| Ticker | Company | Price (USD) | Daily Change (%) | India Sourcing Exposure |
|---|---|---|---|---|
| WMT | Walmart Inc. | 119.14 | +1.47% | High ($10B Target) |
| TGT | Target Corp. | 105.47 | +2.56% | Moderate (Softlines) |
| AMZN | Amazon.com | 244.50 | +2.17% | High ($20B+ Exports) |
| COST | Costco Wholesale | 940.25 | -1.33% | Low (Domestic Focus) |
The Logistics of Diversification
Diversification is expensive. It requires new ports. It requires new factories. It requires new relationships. The 18 percent tariff rate makes these investments viable. The previous 50 percent penalty was a deterrent that kept capital on the sidelines. Now, the floodgates are opening. We are seeing a shift in container traffic from the South China Sea to the Indian Ocean. This is a long-term structural change. It is not a temporary trade win. Retailers are signing multi-year procurement contracts with Indian textile hubs in Tirupur and electronics clusters in Noida. The technical challenge remains infrastructure. India’s ports must scale to meet the demand of the American consumer. If they fail, the tariff reduction will be wasted on demurrage and delays.
The next milestone is the March 2026 trade audit. This will verify India’s compliance with the Russian oil ban. Market participants should watch the WTI crude price closely. A sustained drop below $60 a barrel would indicate that the global energy reshuffle is holding. If India adheres to the New Delhi accords, the 18 percent tariff could become a permanent floor for a new era of Indo-American commerce.
