Trump's tariff shock to India: What Modi government could have done differently

Indian Express

2 days ago

After sealing a deal with the European Union and Japan, agreeing to a 15 per cent tariff in the case of these developed industrial economies, and even as he strings China along, United States President Donald Trump has shocked India, a low-middle-income developing economy, imposing 25 per cent tariff. Till recently, the official Indian briefing to the media was that discussions were still on and India may get a couple of weeks' reprieve in August to strike a deal.
Hours after the Lok Sabha saw Prime Minister Narendra Modi unwilling to give any credit to President Trump for the pause in Operation Sindoor, the latter hit hard. Even after the PM's and foreign minister's statements in Parliament, President Trump tweeted for the nth time his claim that he had stopped the war. He had always linked that to trade. There's more to the Trump action than just trade and tariffs.
Never since 1971 has India found both the United States and China on the same side on a matter concerning Pakistan, while at the same time having to defend her relationship with Russia. This is perhaps the lowest point for Indian foreign policy that has consistently endeavoured for three decades to keep the US on the Indian side while having to deal with the China-Pakistan alliance. The Parliament must undertake a comprehensive review of Indian foreign policy.
India is now stuck in a Catch-22. Damned if he will, damned if he won't, Prime Minister Modi will not admit that US intervention played a role. If the issue was only about how the war ended, the matter would have rested there. After all, even in the past, the US did play a role in sorting out issues between India and Pakistan, even with India consistently maintaining that all disputes between neighbours can only be settled bilaterally. No US President has made a big deal of it in the past.
This time it's different. Not only has President Trump made a big deal of his intervention, explicitly seeking credit for it, but he has gone a step further and linked this to the outcome of the trade and tariffs negotiations. While the EU and Japan are relatively happy with the outcome of tariff negotiations, making promises on investment, and China is working its way through Washington DC's corridors of power, India has been hit.
Worse, as one longstanding watcher of US-India relations said on a social media post, Trump has rubbed salt into Indian wounds by striking a deal with Pakistan, 'whereby Pakistan and the United States will work together on developing their massive oil reserves.'
Could Prime Minister Modi have handled President Trump differently?
The problem goes all the way back to Indian expectations about a second Trump presidency. Even as Prime Minister Modi tried to remain neutral between Trump and Kamala Harris in the run-up to the presidential elections, many in India and many Indians in the US continued to assume that Trump would be better for US-India relations. When Trump chose to invite President Xi Jinping of China to his inauguration in January without extending such an invitation to Modi, alarm bells would have sounded in New Delhi's South Block.
Both the PM and External Affairs Minister worked over time to reach out to President Trump and retrieve ground. It is possible that after this initial shock, the Prime Minister and his diplomatic team may have re-assessed the status of US-India relations. The earlier assumption that President Biden was unfriendly towards India, and in fact friendly towards Pakistan, while President Trump would rebalance the equation ought to have been dismissed and a new assessment made about what lies ahead. It appears Pakistan made such a re-assessment and quickly invested in the Trump entourage, buying up support.
When President Trump unveiled his trade and tariff policy, he repeatedly named India a 'tariff king' and as a target for action. Perhaps the Modi government had hoped that by buying more defence equipment from the US, showing how it is contributing to the US economy, Trump could be appeased. The government even proposed a bilateral free trade agreement and hoped the negotiating process would get India off the hook. There was considerable optimism within the Union commerce ministry on this count even as late as April this year. Matters, however, had not been sorted out.
Caught in this trade trap, the Modi government had a fantastic opportunity to feed President Trump's ego and vanity by thanking him for his role in the declaration of the ceasefire. Of course, it would be argued that Prime Minister Modi would not have wanted to depart from India's longstanding diplomatic posture of denying any role to the US or any other country in settling a bilateral dispute with Pakistan. But there was a way out.
After ceasefire was declared, Prime Minister Modi could have called President Trump, referred to the conversations he had with Vice-President J D Vance, and the foreign minister had with his counterpart, and thanked Trump for his interest in ending wars and maintaining peace around the world and then added a line about how India-Pakistan issues can only be settled bilaterally. By linking his role in terminating Operation Sindoor to a trade deal, Trump appeared to be seeking a quid pro quo – credit for his role in exchange for concessions on trade.
The official Indian position could have been, 'Yes, President Trump was concerned about the situation getting out of hand. He reached out to both sides. We thanked him for his concern. But, we declared ceasefire only after our objectives were met.' End of story. Modi would have acknowledged Trump's role without giving him credit for the final decision and sticking to the standard Indian position that India-Pakistan disputes will only be settled bilaterally.
Whatever happened on those four fateful days in May this year, the government was clearly not prepared to deal with the larger challenge of the Trump presidency – that of pandering to and appeasing Trump's ego. The present Indian leadership does not have the toolkit to deal with egos as big as their own.
This is all the more surprising given that few heads of government around the world had established a better equation with President Trump than Prime Minister Modi. The government and foreign affairs scholars owe an explanation to the lay public as to why US-India relations have deteriorated to the point we find ourselves in today.
The writer was member, National Security Advisory Board of India, 1999-2001 and media advisor to the Prime Minister of India, 2004-08