The India Prime Minister Narendra Modi’s recent visit to the US has generated a new enthusiasm amongst the world community around the question, how India is going to deal with the new leadership at the White House? This question assumes significance as Trump has embarked on a juggernautish idea of imposing tariffs on all the states with whom the US has a trade deficit or whom he regards as unfair trade partners. While on the one hand, Modi was given a warm welcome in the US and the Trump administration received him with a pompous show. On the other hand, Trump has previously called India ‘The Tariff King’ and has reiterated to levy heavy tariffs on the state, if in due course it is not ready to correct its unfair trade practices. In this context, we will analyse how the meeting fared between the two heads of the world’s most important states with Narendra Modi commanding respect at the White House on the one hand and Trump’s blatant promise to levy harsh tariffs on the other.
Modi-Trump Meeting amid Global scenario and Bilateral Frictions
On February 14, the visit of Indian PM Narendra Modi to the USA to meet his President-friend Donald Trump received a fair share of media coverage internationally (at the domestic level, in India the paeans of the show would continue for a relatively long period), but the turbulent and ever-changing dynamics of the international life cut short the celebratory tune of the meeting. There were both international as well as domestic reasons, for the celebrations of the meeting were cut short and overshadowed by events that have been plaguing the international system for long.
Internationally the meeting of the heads of the states at the Munich security conference where J. D. Vance the newly elected Vice President of the USA delivered what Guardian columnist Rafael Behr described as an “ominously unhinged” culture war attack speech on Europe, in Europe, before meeting a far-right German political party leader a week ahead of the German election. Second, Donald Trump labelled Volodymyr Zelenskyy as “a dictator”, the US secretary of state met Russian officials in Saudi Arabia to discuss the future of Ukraine without Ukraine being part of the negotiations. Third, the war-torn West Asia saw the swap of political prisoners and hostages between Israel and Hamas while Trump’s ridiculous plan of shifting the Gazans to other states, has left the world divided. While the international events were not directly concerning for India-US relations, a series of deeply unsettling bilateral events caused much consternation for India and vanished the furore caused by the early meeting of the newly coronated heads of the two states.
The Department of Government Efficiency (DOGE) announced on February 16 that it had “cancelled” USAID funding of “$21 million for voter turnout in India.” Elon Musk led DOGE list’s USAID grants were channelled via the Consortium for Elections and Political Process Strengthening(CEPPS), a group based in Washington DC. The controversy sparked a political clash in India with BJP claiming that Trump’s statement confirmed a foreign attempt to interfere in Indian elections, while the congress dismissed his remarks as ‘nonsensical.’
Trump has reiterated at the Republican Governors Association meeting in Washington DC “$21 million going to my friend Prime Minister Narendra Modi and India for voter turnout. We are giving $21 million for voter turnout in India. What about us? I want voter turnout too.” He also remarked during the televised address by NBC News that “Can you imagine all that money going to India. I wonder what they think when they get it. It’s a kickback scheme.” The other major bilateral irritant overshadowing the broader relationship and the recent meeting has been the trade practices and tariffs which showed its immediate effect when Trump addressed the Indian high tariffs policy during discussions with Modi. To be sure, there is friction, most notably on trade and immigration. Trump has earlier accused India of being a ‘tariff king’ and ‘very big abuser’ and dislikes India’s trade surplus with the US. Modi tried to address this criticism with offers to buy more American goods, most notably energy and defence products6. Also, the deportation of illegal immigrants to India with India being the third largest source of illegal immigration into the US after Mexico and EL Salvador, has not been a positive sign for the relationship. The discussions surrounding the triumph of the Modi-Trump meeting have been overcrowded by debates and discussions around these international and bilateral events.
Reciprocal Tariffs: A Disguised Challenge for India
Trump’s proposal of reciprocal tariffs seems like an add-on to a grand show where the ‘Trump circus’ started with his rhetoric earlier this year to his casually passing a statement on occupying Gaza to now imposing ridiculously high tariffs on America’s partners. With the rupee already fluctuating every day, imposing further tariffs will not bode well for India. Trump, just before Narendra Modi arrived in the US, stated his views on how Asian countries especially India levied unreasonably high tariffs on US imports, and now is the time to play fair. Trump’s strategy for a “Fair and Reciprocal Plan” may have concerning repercussions for India. While it may seem fair to Trump to levy the same (equal) tariffs, is it really a just move towards India? Considering one state (the US) is the largest economy in the world, whereas India though the fifth largest economy, still falls behind. Evidently, the Indian rupee has dropped drastically, reaching its lowest in February at 87.95 with speculations that it may drop further by the end of this year. Now the question arises, does America really get to play the victim card, justifying it in the name of unfairness by other nations. Talking about equitability, is it fair if broad tariffs are imposed on every partner of the US but not China, setting up more companies in China than in India and claiming to fully support India when Trump confidently mentioned how setting up a Tesla factory in India would be “okay” but “unfair” to the US. Due to this reiteration to levy heavy tariffs India plans to reduce tariffs on 30 items, the union budget has already reduced tax on “textiles, electronics and motorcycles”. Another implication of this is an increase in India’s defence and energy purchases from the US, which has been one of the prime targets under Trump, to make India buy more US-made security equipment. India along with its economic burden is also under political pressure with the Trump administration’s action towards the H1 visa. Now the only resort to mellow the tariffs down is to ensure diplomatic and highly efficient negotiations, but then again despite these climate or defence agreements, can a trade conflict be avoided?
Nomura Holdings, after the announcement of these reciprocal tariffs, stated that India and Thailand are the two Asian nations most likely to get blown by the obnoxiously proposed reciprocal tariffs. In 2019, in Texas, Trump at a joint rally with Narendra Modi stated that “India has never had a better friend as President than President Donald Trump”, but in the current context, the statement seems rather condescending. Trump is playing a brilliantly cunning game of chess, where Modi might initially be used as a strong pawn to build up strong relations and attain strategic control. Trump could seem like a valuable ally at first by backing Modi in all his initiatives, assisting him in taking down some chess pieces. However, further in the game, Trump may show his true standing, this unpredictable move of imposing tariffs can be seen as a move that leaves Modi in a precarious position, jeopardizing its economic and political strategies. Towards the end of this game, Modi might realize he was initially winning the game with Trump’s backing but now is left in a treacherous situation without much safety and support. Although, it is safe to assume that India has other allies who will come to the rescue, but chess is a two-person game. Modi to stay in the game has to find a way to escape this checkmate.
The positives beyond Tariffs
Nonetheless, apart from the trade deficit and economic negotiations, the Modi-Trump meet had certain advancements in terms of defence, space, and trade routes. Starting with defence, the two countries have decided to take a step forward in this arena by the US deciding to export F-35 fighter jets to India, making India one of the few countries to attain ownership over these fighter jets. The advancement in building a trade route, through the IMEEC- India- Middle East- Europe Economic Corridor, which binds India, Israel, Italy, and the US in a special trade setting. Further magnifying the bilateral relations, the decision to procure oil from the US and aim at being one of the top exporters of oil to India is shaping out to be a good sign for the India-US relationship, although this dependence on the US can cost India in the near future. Now the space initiatives between the two countries have captured world-wide attention, be it the promise to send the first Indian astronaut to the ISS- International Space Station by 2025 or the NASA-ISRO NISAR mission to further strengthen space exploration as well as the India-US relationship. The meet in fact was a successful endeavour to enhance strategic engagement and made matters clear as to how India shall approach US in the future.
As Chietigj Bajpaee of the Chatham House writes “Both Trump and Modi are strongman leaders with shared perceptions of China and radical Islam as existential threats, a mutual animosity of the liberal media and civil society, well-entrenched economic nationalism and a value-neutral foreign policy dictat. This personal rapport established by the two leaders along with the broader convergence in policy framing, will act as a unifying force against all these differences and help the two leaders navigate these irritants in solidifying the relationship. The issue of Tariffs is going to be the long term serious policy problem which both the states are going to face in the future. The Modi-Trump meeting was a positive sign to balance the relationship and was an opening for India to deal with Trump’s highly controversial and muscular international adventures.
[Photo by the White House, via Wikimedia Commons]
Musssaib Rasool Mir is a senior research fellow at the School of International Relations, Department of SCAS, Central University of Punjab, India.
Srishti Sharma is a research fellow at the School of International Relations, Department of SCAS, Central University of Punjab, India. The views and opinions expressed in this article are those of the authors.
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