Many in New Delhi welcomed US President Donald Trump’s return to power, expecting him to take the Indo-US relationship to new heights. They must wonder where it all went wrong, given that Trump launched an unprecedented broadside against India this week — threatening tariffs of 25 percent and warning that a surcharge would be added unless India stops buying Russian oil and weapons. He even expressed dissatisfaction with the nation’s participation in the “anti-US” BRICS grouping.
Normally, Indian Prime Minister Narendra Modi might overlook a few social media posts. It might be humiliating to wind up with higher tariff rates than India’s peers after wooing Trump, but that could be shrugged off as well. Yet Trump did not stop at trade. He twisted the knife by announcing a tariff deal with Pakistan on the very same day — and added that US companies would help India’s troubled neighbor extract oil from recently discovered reserves, and that “maybe they’ll be selling oil to India one day.”
I am not sure Trump knows what he is playing with. Yes, the government was looking forward to a more transactional era: For New Delhi, almost everything is negotiable, but not its relationship with Pakistan. Citizens already resented Trump claiming credit for a ceasefire between the nuclear-armed nations earlier this year. Nothing is more likely to cause any Indian leader to dig in his heels and stop talking about economic ties than a mention of Pakistan.
Policymakers are grimly absorbing some unpalatable truths. Has New Delhi overestimated its geopolitical importance? The tariff threat was bad enough: 25 percent is higher than the 19 percent agreed with the Philippines and Indonesia, and much higher than the 15 percent offered to US allies such as the EU, South Korea and Japan.
For some reason, India expected it was so indispensable to the US that it would receive a better deal than long-term allies — even one that preserved the barriers it has erected around industry and agriculture. Instead, unless it gives away far more than planned, it might wind up as one of the few countries that emerged from Trump’s tariff “pause” with a higher, not lower rate than was originally threatened.
New Delhi has learned, too late, that it has very little actual leverage in Washington. The Chinese might be granted another extension, because they have things that they could threaten the US economy with. The Europeans and East Asians could promise to buy US-made weaponry or invest in the US. India could neither threaten nor bribe.
For years, it has nevertheless managed to punch above its actual economic weight by tacitly promising to be part of Washington-led attempts to contain a rising China. Tacitly, not openly, mind — India does not believe that closeness to the US precludes it from participating in China-dominated groupings or supporting Beijing’s clients in Moscow.
However, Trump’s ire demonstrates that this balancing act might have finally run its course. Russia might not be his top priority, but its second-largest client’s refusal to fall in line would still irritate him. He received fulsome praise from Pakistan’s leaders after he announced a ceasefire; the Indians pointedly ignored him. This White House wants homage, not defiance. There was certainly a cantankerous edge to his remark that, for all he cared, India and Russia could “take their dead economies down together.”
Had he merely demanded more distance between Delhi and Moscow — and done so, if possible, without insulting India’s economic prospects — leaders might well have quietly given in.
The discount on Russian oil is only between US$6 and US$10 a barrel, Standard Chartered research showed. The impact on inflation of switching to US sources would be negligible. Sure, the government would have to somehow convince its nationalist base that the switch would be in the country’s interest after spending two years claiming the opposite. However, trust in Modi is high enough for him to pull that off.
However, what voters would not accept is any dilution of the government’s hard line on Pakistan. Capitulation to Trump after he has signaled that he preferred their neighbors would be a tough sell, even for Modi.
In less than 24 hours, New Delhi’s policy for the Trump era, and its carefully cultivated strategic ambiguity amid US-China tension, were left in shambles. I expect Modi would still be able to push through some sort of deal, if with more concessions and domestic political damage than he would like. However, Trump is clearly asking himself exactly what India brings to the table as a partner.
Equally, citizens would wonder if the US is once again making the mistake — as it has so often before — of trusting Pakistan’s establishment while ignoring India. New Delhi’s confidence that it could navigate the Trump era has been well and truly shattered; it would take a long time for the relationship to recover from this tumultuous week.
Mihir Sharma is a Bloomberg Opinion columnist. A senior fellow at the Observer Research Foundation in New Delhi, he is author of Restart: The Last Chance for the Indian Economy.
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