President Donald Trump is a man who inspires several adjectives. Predictable is not one of them. In just two and a half years, he has started a trade war with China, sanctioned Russia, shaken hands with North Korea’s Kim Jong-un, rattled neighbours Canada and Mexico and put his allies on notice.
It’s hard to tell who fears President Trump more, his friends or his enemies. ‘America first’ was clearly more than just a campaign slogan. It is a mantra the President truly believes in as he swings, wrecking ball-like, on the existing world order. All told, the United States is the world’s pre-eminent economic and military superpower and will remain so well into the middle of the 21st century. Its $20.5 trillion economy is significantly larger than that of China ($13.4 trillion) and accounts for 24 per cent of global output. The US spends more on its defence budget than the next seven countries combined.
One of the miracles of the post-Cold War meltdown has been the surging IndoUS ties. The relationship, sealed by the Indo-US nuclear deal in 2008, has been nurtured under US presidents George W. Bush and Barack Obama. India’s ‘Major Defence Partner’ tag allows it access to topof-the-line defence equipment not available even to close US allies. US administrations have generally taken a long-term view of their strategic ties with India, a country they see as a regional counterbalance to China. Lately, this has changed. As Indian diplomats have discovered, the Trump view is more short-term and transactional. If the
US helps declare Pakistan-based Jaish-e-Mohammed chief Masood Azhar a globally designated terrorist, it expects India to reciprocate by halting oil imports from Iran.
This is not a uniquely Indian challenge.
Several US allies have had to factor Trump’s unpredictability into their foreign policy calculus. Handling the US under Trump is one of New Delhi’s biggest foreign policy challenges. This year, the US overtook China to become India’s top goods trading partner in the financial year 201819. The bilateral trade relationship is worth $142 billion, and therein lies the rub.
At least three of 10 points of friction between India and the US relate to trade, particularly, a $24 billion trade deficit that President Trump has been hammering away at. The US wants India to reduce tariffs and duties on a range of goods, including medical equipment, vehicles, toys, and even cherries. The US withdrew its special duty concessions under the Generalized System of Preferences (GSP) in May that adversely impacted 12 per cent of exports from India. In retaliation, India imposed higher tariffs on 29 products the US exported to India. The US has chafed at a new Indian ecommerce policy that levels the playing field for Indian brickand-mortar retailers and hurts US e-commerce giants like Amazon and Walmart. There is also Trump’s pet peeve—
import duties on Harley Davidson motorbikes which he wants India to completely remove.
US President Trump and Indian prime minister Narendra Modi are due to meet at the two-day G20 summit which starts on June 28 in Japan. It will be a fine time to assess one of India’s most unpredictable strategic partners.
The Trump presidency has seen H1 B work visas become not only tougher to get but also costlier for Indians. The US has shut the pipeline on India’s cheap oil imports from Iran, raising our oil import bill. The Trump administration opening up talks with the Taliban has imperilled New Delhi’s deep investments in the region. There is another elephant in the room—Russia, a country that the US regards as an adversary but which is one of India’s closest strategic partners. The Trump administration has responded to India’s purchases of Russia missile systems such as the S-400 by threatening to impose sanctions.
Our cover story, ‘Trading Punches’, by Group Editorial Director (Publishing) Raj Chengappa, examines the issues before India and the US. When Chengappa, in an exclusive interview with US Secretary of State Mike Pompeo, asked him what they discussed when he met with the Indian leadership, Pompeo said, “We spoke on how we can make this a different age, a different time. We can be more ambitious in our relationship. We can make positives out of trade, military, defence cooperation issues. There is a real commitment, a deep understanding of how our countries can work together. In every interaction with the leadership today, there was an understanding that for the sake of our two peoples, the region and the world as well, America and India need to be good partners. We benefit from India, and you benefit from us.”
There is likely to be intense give-and-take in the Indo-US relationship. Exactly the way the US president likes it. As a WTO signatory, India can justify its tariffs and stand up to US bullying. It can also use its status as a major importer of US military hardware—deals for aircraft and helicopters worth $15 billion so far, with drones, helicopters and aircraft worth another $10 billion in the pipeline—as a bargaining chip.
As one senior US diplomat colourfully put it, “India should be treating America as a girlfriend with sweet gestures by giving small concessions. Instead, it’s more like the divorce proceedings of an estranged couple.” The American relationship is an important one. Prime Minister Modi must draw on all his reputed pragmatism to repair this relationship and get back to being a happy couple.
Our Mar. 13, 2017 cover
Our Nov. 21, 2016 cover