A very interesting situation is coming into being in the current scenario of US-India relations. A belligerent 25% tariff and a further warning of another 25% along with extra penalties on account of India’s proximity with Russian oil and weapons is ringing alarm bells in New Delhi. US President Donald Trump’s provocative posts and announcements on his social media, Truth Social have certainly created an air of unease over the state of this treasured strategic partnership that New Delhi has with Washington. The paradoxes are quite jarring. Trump’s purported bonhomie with Indian Prime Minister Narendra Modi is quite renowned. In that very context, publicly degrading India and calling its economy “dead” and announcing undefined “penalties” along with tariffs for India’s trade with Russia, seems unexpected and quite provocative.
Why this sudden outburst?
President Trump is not exactly known for reliability when it comes to his stand on foreign relations. His outbursts on Truth Social have created diplomatic faux pas numerous times throughout his second term. Things were not looking too bleak with India however; trade representatives from both nations are hard at work to eke out a trade deal, a seminal QUAD summit in September where President Trump is expected to visit India. So, while not entirely unexpected the question arises as to why now? Beyond the hyperbole of strategic partnerships and largest-oldest democracies, the fallacies in the relationship cannot be discounted. While a more conventional presidency abstains from openly engaging on the problems in the ties, Trump is an exception.
His frustration is not entirely misplaced. India is actively engaging in forums like BRICS along with Russia and China whose basic mandate is to form a more multipolar global order and move away from US centrism or ‘De-Dollarization’. India’s defence cooperation with Russia is only deepening with the acquisition of Su-54 stealth fighter jets also on the cards, while evidently snubbing the US F-35. Furthermore, buying and recycling of Russian oil for export to global markets and defying sanctions have been a sticking point. India’s overall aim at strategic autonomy and a very principled and nuanced stand also sometimes, does send a message whereby the US feels quite unsure as to where India stands on global issues on which it needs convergence from its strategic partners.
On the trade front as well, India is a protectionist economy. While its tariffs on the US are not obtrusively steep at 17%, it does create a complicated situation since India enjoys a significant trade surplus of about US$ 43-46 billion with the US. The US is a larger market for India than India is for US manufacturing or services. This creates an anomalous situation where materially speaking the US does and can feel shortchanged.
Now, if its broader strategic interests were being fulfilled by India acting as a strong counterweight to China in Asia and closer defence ties, then things might have evened out. In fact, much of the leeway that the US extends to India– for instance, exemption from Countering America’s Adversaries Through Sanctions Act (CAATSA), exemption from sanctions from dealing in Iranian and Russian oil, is predicated on the broader US strategy to maintain a vital tactical counterbalance in the Indo-Pacific to China. But the US naturally feels that India is not holding up its end of the bargain, when it refuses to even mention China explicitly in QUAD summits, principally stands against involving any third party in its own dealings or disagreements with China and engages avidly in multilateral frameworks with the USs’ primary adversaries, aimed at building a post-US dollar global economy. US sees India’s active involvement and leadership in BRICS, close and value heavy defence ties with Russia as clear indications of a friend and ally on paper but not in praxis.
Where does India stand?
India has reacted in a measured fashion and is legitimately operating under its own diplomatic constraints. For India, maneuverability in international policy is critical which means that New Delhi never puts all its eggs in one basket or is willing to be pushed to a corner. The ‘strategic autonomy’ doctrine is integral to India’s engagement with the global community, a principle of impartial neutrality. Nonetheless, this neutrality also has its tilts based on historical and realist considerations. Moscow has been a long-standing partner which has proven itself as a time-tested partner, consistently for the last 50 odd years. Realistically, India needs Russia on account of its substantial defense ties, until New Delhi’s own indigenization picks up pace.
The US on the other hand has never really proven entirely reliable. It has always used supporting Pakistan as a carrot and stick strategy with India. While the recent camaraderie has been a response primarily because of an ambitious China. And incidentally the faults are showing in the bilateral ties, and they will widen if the US continues to try to coerce India to choose a side. India has the aspirations and the potential to become a great power in international politics, with its own brand of global diplomacy which may not align with that of the US. India sees the US as an equal partner and not a hegemon, Washington does not get to dictate terms but negotiate the same with New Delhi. This dynamic cannot be unilaterally altered by either party.
Beyond that in the trade arena as well, the US needs to realize that just crying foul about doing very little business with India, does not alter actual economic realities. US manufacturing and exports are not very globally competitive, whether subject to tariffs or not. At least in an extremely price sensitive market like India, there is only so much it can do against East and Southeast Asian competitors and even domestic competitors. Tariffs are not really the only thing holding the US back in Indian markets, while ease of access will lead to a quantitative uptick in imports, it is unlikely to endure beyond a certain ceiling. Rhetoric cannot surpass hard economic realities of efficiency and cost of production especially in manufacturing where the US lags.
What’s Next? Realistically.
President Trump’s statements have a catch, which is that they are Trump’s statements, and do not always necessarily reflect the broader US foreign policy direction. His unilateral statements usually set a scene rather than spelling any paradigm shift in international policy. He is clearly vexed that the peace deal with Russia that he created so much buzz about back in March, failed miserably to even hold a steady ceasefire. He had to publicly renege his statements on Putin and backtrack his entire Ukraine policy. India’s firm refusal to concede, that the US allegedly played any role in negotiating a ceasefire between India and Pakistan, when things came to a boiling point back in May during India’s Operation Sindoor, must have added to Trump’s ire. His lofty promises on quick foreign policy wins and being the global peace broker have barely shown any substantive wins. Essentially his randomized attacks on Truth Social have done more harm than good to US global reliability.
In this scenario his lashing out at India is quite understandable. Beyond just an emotional response, Trump fames himself on his ‘Art of the Deal’. His foreign policy is often characterized as a real estate deal with a mix of coercion and pressure in the negotiations. This attack on India right before a US trade delegation visits to finalize an interim agreement later in August, can also be construed as a bargaining tactic to up the ante, on this long-awaited trade deal. The bottom line is, India need not give in too much, and nor fret as Trump’s presidency is only here for 3 more years. His term does not necessarily indicate any paragon shift in US policy, the trade deal will move forward, the penalty, revaluated. However, India might have to be a bit more receptive to US concerns in the short term since trade with the US is tilted in New Delhi’s favor and that gives Washington some leverage.
The relationship, though flawed, does have its significance and has weathered more storms than one keyboard happy president. US policy is transient and will shift after Trump, provided India still is viewed as a legitimate leverage against China. However, whether US policy shifts or not, India’s aim should not be appeasement but strategic engagement keeping its own national interest paramount, as does the US. All eyes will be on the September QUAD summit and what it yields. Whatever be the mood in the India summit, US-India ties can never be defined by a single presidency. India’s objective for now, should be playing for time, pragmatically with the US. It must be measured, confident and resolute. This is undoubtedly a rough patch but it too shall pass.
