The threat of up to 50 per cent US tariffs on goods from India, which emerged from the White House over the past month, struck many as a bolt seemingly out of the blue. Indian Prime Minister Narendra Modi had had a good visit to Washington in February, and a detailed trade deal between Washington and New Delhi seemed all set for approval at the end of this month.
While India will probably avoid the worst-case outcome, the level of surprise indicates that New Delhi lacks high-level advocates in Washington with the inside track. As a result, it is still struggling to grasp how US President Donald Trump makes decisions, or how he views both trade and the Indo-US equation. Until those inter-linked problems are sorted out, bilateral relations will continue to bounce between the highs of periodic direct contact by the two national leaders, and regular lows in between.
India’s diplomatic and business communities continue to wonder how things went so wrong between the two governments in recent months. The answer to this question lies in New Delhi’s struggle to adapt to Mr Trump’s commercial (rather than diplomatic) approach to dealmaking.
The tariff threats to India come from two directions: the Russia-Ukraine war and the emergence of competition – as opposed to co-operation – between major trading powers facing the threat of tariffs from Washington.
The war in Ukraine is the more volatile of the two factors, with the Trump administration’s policy veering from Moscow’s point of view, then to that of Kyiv and Brussels, and now back to Moscow’s following the US-Russia summit in Alaska last Friday. This latest swing is good news for New Delhi, as the threat of secondary sanctions for buying Russian oil is likely to recede at least temporarily. But even if (or more likely when) the pendulum swings again, it is unlikely that the US will be maximalist in its demands. Any rapid and major change in Indian oil purchases would put strains on global oil supply and send prices shooting up for American voters, something that no administration wants to see.
The battle between the EU and UK on the one hand, and Russia on the other, to influence Mr Trump on the war in Ukraine also provides an essential window into the challenges of diplomacy with the administration. Much has been made in commentary about the importance of top-level chemistry, and the natural advantage of strong leaders such as Russian President Vladimir Putin winning Mr Trump’s respect and agreement. However, Russia’s example goes to show why this just isn’t enough.
Mr Putin’s ability to effectively communicate Russia’s perspective is extremely powerful. But the lack of any other interlocutors who can engage with Mr Trump as persuasively means that Moscow struggles to build momentum. In contrast, the EU and UK have found a range of “Trump whisperers”, people below the head-of-state level who understand the US President. It is these contacts who have managed to stay appraised of Mr Trump’s ever-shifting priorities and perspectives and convince him of the relevance of their positions to those priorities. Until India can find its own Trump whisperers, the positive, can-do Trump-Modi personal equation will not be enough to keep the bilateral relationship on the rails.
The other half of the tariff threat is closely tied to this problem. Mr Modi’s productive meeting with Mr Trump in February gave India’s notoriously tough negotiators a sense of what it would take to craft an agreement that would satisfy both sides. But one of the Trump administration’s greatest successes is that it has created competition rather than co-operation between countries facing the threat of US tariffs.
Over the course of the summer, the larger trade partners of the US – led by the EU and UK – showed a new willingness to cross their own previous red lines to make deals with Washington. Mr Trump seems to regard it as axiomatic that these developments shifted the baseline of expectations for all others who followed. In this view, it would be up to India (currently only the US’s 10th-largest trade partner) to try to improve its offer and match the depth of concessions granted by the larger US trade partners.
Despite all this, India and the EU find themselves in a similar boat. The Trump administration does not view either entity to be dominant security actors in their regions (unlike say China, Russia or Israel). This magnifies his annoyance when they offer a narrative that contradicts his own – for example, the EU’s constant reminders that Russia is the aggressor in the Ukraine war, or New Delhi’s rejection of Mr Trump’s claim that he mediated the end of the recent hostilities between itself and Pakistan earlier this year.
Similarly, the US President’s anger with European and Indian trade surpluses with Washington is complemented by a lack of fear over their economic advantage. Mexico, China and Canada's trade offers have greater political leverage than the EU or India for reasons that go beyond sheer volume.
These exporters supply daily goods from food to energy and mid-to-low-range cars and phones that have a critical direct impact on the everyday lives of average American voters. Any trade war brings serious political costs for the Trump administration. Indian exports, on the other hand, range from engineering goods to gems and jewellery that do not carry the same risks. Neither do luxury European goods, whether cheese, wine or limousines. The one exception is India’s supply of generic medications, which have become a cornerstone of American health care; a canny Mr Trump may extend a temporary waiver to generate pressure while avoiding backlash.
In short, the strength of India’s hand in dealing with the Trump administration is fundamentally different than it looked at the start of the US President’s second term, when the new rules of the power game were just beginning to emerge. But on the other hand, the European experience suggests that even a so-so hand can be played to great advantage once those new power rules have been understood and applied.
