Friends with Differences

A GOOD explanation for US President Donald Trump’s tariffs on India is his impatient character. He does not believe in the usual rules of the game, slow-grind­ing diplomacy and endless quibbling over minor details of deals being negotiated with different countries. If he doesn’t get what he wants, the tariffs kick in.

There is, however, more at work in the turbulence in India-US relations. Since 2022, when Joe Biden was presi­dent, ties between the two countries have hit a rough patch. The US did not like the fact that India did not line up on Ukraine’s side in its war with Russia. Ukraine is an obsession for American strat­egists but not for India. For India, its relations with Russia tower above any other in the Eurasian mainland. This simple fact eludes the usually astute American mind.

Trump’s tariffs, too, are strange to say the least. India, he has said, is being penalised for buying Russian oil. This is a peculiar argument to make. The US has imported billions of dollars worth of fertilisers, non-ferrous metals and inorganic chemicals. Similarly, Trump has alleged that India is part of the BRICS group and part of the penalty is due to its being a member of BRICS. It will be interesting if Trump uses the same logic while imposing tariffs on China, a country that is economically, technologically and militar­ily a near peer of the US.

The truth is that the US does not want the Indian economy to grow and for India to acquire military muscle. The excuses have varied between different US administrations, but the end goal remains the same: how to halt India in its tracks. In the Biden administration, the excuse was India’s “human rights” record and its treat­ment of minorities. Trump’s excuses seem more random but the goal remains the same. Lindsey Graham, his sidekick from South Carolina, said as much while proposing the Bill that would serve as a “bunker buster” against the Indian and Russian econo­mies. Graham was being honest while Trump was being Trump.

It is a bit early to assess the damage from the Trump tariffs on India given that negotiations are still in progress over a trade deal. But early estimates by different economists suggest that India’s growth may be shaved off by 0.3 percentage points of the GDP. Interestingly, the In­ternational Monetary Fund’s (IMF) July World Economic Outlook (WEO) projected the Indian economy to grow at 6.4 per cent in 2024-25, bumping up its April WEO estimate by 0.2 percentage points. After the Trump tariffs, India will grow at more or less 6 per cent plus.

This is not to say that there will be no pain. Trump can raise tariffs further and even impose non-tariff barriers. The US is a major export destination for Indian phar­maceuticals, textiles, gems and jewellery. Trump’s tariffs will hit these sectors. What saves India is its relatively low exposure to exports as a source of growth. This is a bane and a benefit at the same time. In good times, India’s inability to become an export-oriented country badly hit its economic prospects. But with Trump around, it has also been a safeguard.

Indian strategists have always favoured a multi-polar world order for obvious reasons. A multi-polar world enhances India’s room for manoeuvre in the world. This is a red rag for all American administrations, including Trump’s even if he uses very different language to describe that. In light of how India-US ties are limping (unravel­ling?), this was the right course to take.

Hopefully, the bilat­eral relationship will not be damaged beyond the point of recovery. But it is important not to have any blinkers about the nature of American power: the two countries will remain, at best, estranged partners.

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