The Trump tariff
The US President has trained his trade guns on India. How this will end depends a lot on Modi’s diplomatic skills
As Narendra Modi took off on Air India 1 towards Japan, he could scarcely have imagined that while he was airborne, US President Donald Trump would make India the latest victim of his incessant tweeting. This, less than a day after his top diplomat came to India and said that trade is not a problem and India-US defence cooperation is top of the agenda for his government. But with Trump, nobody really knows what he is thinking and doing. He has truly upended global diplomacy and almost single-handedly kept the micro-blogging service Twitter relevant, blowing hot and cold. Trump is upset that India increased tariffs on 28 American imports soon after the US removed the benefits that Indian exporters received under the Generalised System of Preferences (GSP) impacting $5.5 billion of Indian exports. This is not the first time he has vocally complained about Indian tariffs; he has in the past complained about the extremely high import curbs India has for motorcycles, Harley-Davidson to be precise, but this is his first Twitter missive to India on trade.
India has upset the US on many fronts.The latter is angry we are purchasing the S400 Surface-To-Air missile defence system from Russia. Our e-commerce policies have been vehemently opposed by American retailing giant Walmart, now owner of Flipkart as well as Amazon. US financial services firms are upset with India’s data localisation norms and, of course, Americans have always been upset at the way Indian IT firms are “taking away jobs.” The US has, therefore, threatened to cut back the number of H-1B visas that India gets allotted. And while External Affairs Minister S. Jaishankar made clear to US Secretary of State Mike Pompeo in Delhi that India would take its own decisions with regard to the S400 purchase and Huawei equipment for India’s telecom networks, we are unwittingly playing a role in Trump’s increasingly angst-ridden issues with China. But at the same time, India is a vital part of the US’ strategy to contain China going forward. The Indo-US ties, despite the trade issues, have never been better, particularly militarily, and Trump and Modi appear to get along. Yet it will take extreme diplomatic caution to deal with the US President. Other countries, particularly China and Iran, have learnt not to second-guess him and hoping that a Democratic candidate will defeat him cannot be the central part of a strategy. Of course, Modi could learn golf, something that appears to have worked for Japanese Prime Minister Shinzo Abe, but dealing with Trump on trade is not going to be easy.