Trump regime's Tariffs against India

A view of road in Delhi, India

NYT published a revealing report on downturn in US-India relations. The report gives an idea on what happened behind the scenes and the real reasons for US imposition of enormous 50% tariffs on India. Of course, we already knew that the reasons given by Trump regime for imposition of tariffs on India were nonsense.

India has been importing Russian oil since long time. India is a developing nation which imports nearly 80% of its oil requirements from abroad and hence is significantly dependent on Russian supplies because it comes at a discount. It’s also known that India re-sells some of the Russian oil in international market for a profit. All this is well known and there is nothing new. See reports from 2023 & 2024 (1, 2, 3). US is well aware of all this and don’t mind this because India is an important American ally in South east Asia. But no more. So why Trump got a sudden change of heart about India?

The answer is not some complex geopolitical reasoning or rational economic motivations. The answer is personal narcissism of Donald Trump. Trump is US President. Trump also wants to be the Pope. Trump also wants to be King of the world. If possible, Trump would also want to be the King of our Galaxy. It’s well understood that Trump is the most incompetent man and an idiot but he sees himself as the greatest & smartest man in the world who deserves everything. Thanks to the failure of American Democracy, an idiot like Trump managed to get into the highest office of nation. This amplified his narcissistic urges which only gets bigger. Here, you should read the work of Dr Bandy Lee to understand Trump’s dangerous pathology.

Trump is eyeing for Nobel Peace Prize. Here, I emphasize that Nobel Peace prize is a trivial trophy awarded by a committee often without substantive merit. A useless souvenir in my opinion. But if Obama can get it, why not Trump? Since coming to office after winning his second term, Trump is butting into international sphere to invent grounds for winning Nobel Peace prize. Trump claims that he has stopped 6-7 wars in last 6 months (which wars?) and deserves some reward for his marvelous diplomatic achievement (!).

Few months ago, there was a flare up of tensions between India and Pakistan. There is nothing extraordinary about India-Pakistan situation as it comes to boil every now and then. The two nations have fought three major wars and numerous small scale battles over territorial dispute. Pakistan funds proxy terror groups in India, especially in Kashmir region, and after a terror attack in April, India retaliated with cross border air strikes. Then Pakistan played tit-for-tat game with its attack on Indian fighter jets. The fighting lasted several days and battle was fought with fighter planes, drones and missiles. In my opinion, the goal of India was to demonstrate escalation dominance over Pakistan. And after several days of fighting, the situation cooled down.

In comes Trump and started claiming that he brokered a ceasefire between two nations. I do not think Trump regime did anything relevant to resolve the situation. Both nations - India & Pakistan - chose to de-escalate for their own reasons. Trump however claimed the credit for ceasefire. The problem started when India rejected Trump’s position that America brokered peace deal between India & Pakistan. India has since long maintained the position that Kashmir issue is a bilateral matter between India and Pakistan and India does not want third party intervention on this matter. India’s position is actually correct on this matter.

Trump wanted India to nominate him for Nobel peace prize but India refused because of its long standing position that it does not welcome third party to intervene in bilateral matter with Pakistan. So India cannot give any credit to Trump for brokering peace between India and Pakistan. And in any case Trump did not do anything to broker peace. A bird drops from the sky and suddenly Trump jumps in taking the credit that he shot it. That’s the perspective on this issue.

Trump took India’s rejection personally and bitterly. And suddenly the tariffs against India shot up to 50%. The excuse of Russian oil trade for tariff was invented. Peter Navarro made scathing attack on Modi regime going as far as saying that Ukraine conflict is ‘Modi’s war’ as India is financing Russia by buying Russian oil. In last many years, India tried to cultivate good relationship with US. India is supposedly the counterweight to China in region (although this notion is greatly exaggerated). US also built QUAD alliance which included Australia and Japan along with India to counter Chinese dominance in the region. All this diplomacy over the years with India - Trump liquidated overnight. And for what? Just to satisfy his narcissism and psychological inadequacies.

Digging deeper into developmental economics and international policy

I like to expand the narrative on India-US relationship a little further. India is poor developing nation trapped in vicious cycle of incompetent & corrupted political regimes over the decades. India could not emulate economic growth model of China or other Asian tigers. It didn’t even come close. The flying geese never came to India. In a cruel irony, Trump regime now mocks India as a deadbeat economy - this certainly has some truth. See my own analysis of India here (1, 2, 3).

The problems with India are too many and too complex to explain in all the detail here. A central problem of India - which is common to post colonial nations - is its failure to modernize its economy. India remains a rural, agrarian and industrially backward economy. A lot needs to be done in terms of economic policy but one critical part of economic policy should be pairing national economy with global economy for industrial modernization. In this regard, the special relationship with US that India always desired was always a fool’s gold. Apart from symbolic friendship and being in good graces with the great ‘Uncle Sam’ , uncle Sam has never been of any material benefit to India.

Then there was China. The fastest growing nation of the world which leapfrogged even some developed nations in last two decades. India was always hesitant in coupling with China due to history of territorial dispute. Both nations fought a bitter war in 1962 when China under Mao infiltrated and captured a part of Indian territory (& occupies it ever since). Experts in New Delhi fear of China’s imperial ambitions. And thus India never tried to develop a real partnership with China.

But is it a sound strategy? This goes to heart of the matter - the developmental issue of post colonial nations. Post colonial nations like India always struggled to modernize their economies. This is mainly due to their internal political conundrums but also partly due to lack of external policy guidance and material support. US had a Marshall plan for rebuilding of Europe after World War 2. There was no equivalent for post colonial nations. The policies of US dominated global institutions like IMF dictating Washington consensus to developing economies wasn’t of much help to many such nations. The struggle of Africa, Latin America and South East Asia region with IMF policies is well known phenomenon.

China charted it’s own territory for economic policy (read 1 & 2) and eventually also created a developmental platform for international partnership - Belt & Roads project (BRO). A developmental model which is supposedly a substitute for western Neoliberal paradigm. India was always skeptical of this and refused to join infrastructure projects of BRO especially due to geopolitical tensions.

In present day, China is a major power player in leading economic sectors - green energy transformation (renewable energy, EVs, batteries, rare earth minerals etc), high tech manufacturing & automation, Artificial intelligence, smart cities development (China’s urban cities are now more advanced than many European nations). China is also closing the gap on semiconductor and biotech industry with America and also becoming a powerhouse in scientific research. More than economic progress, the Chinese economic & political system appears more stable than current MAGA regime in America.

Some geopolitics in perspective

Should India still bet its chips on America? The question is not just related to madman Donald Trump although he undoubtedly has inflicted great damage to India. What has India really benefited from Uncle Sam? I know that being in the good graces with Uncle Sam - the master of dollarized-world - is important. But what else uncle Sam gives to India?

The relationship between US and India has mostly been one sided and this was even before days of Donald Trump. US tells India who to do business with and who to not, without considering the compulsions of India (1, 2, 3). US did not provide any substantive developmental benefits to India and never provided any critical defense technology to India. Even in the grave international emergency, US turned down India’s pleading for help. Recall the pandemic crisis when India along with other developing nations requested for waiver of vaccine IPs & patents so as to quickly ramp up vaccine production for poor nations. US (with EU & Japan) gave a flat ‘no’. Joe Biden was President at the time, not Donald Trump. Economist Dean Baker has written in detail about this issue (1, 2).

India has tried to choose between the two blocs - US (liberal world order) and Illiberal world order (China, BRICS, SCO etc) but didn’t get anywhere. The situation with China is not simple due to history of territorial dispute between India-China. While US never offered any substantive benefits to India, India also never pursued a serious partnership with China. Even still, I see China as a predictable power player with some certainty in its international policy. So, can India build a serious partnership with China? The answer is in understanding China’s viewpoint of the world.

China sees Indian political regime as pathetically weak and failed democracy. A superpower like China will only respect India when India has a degree of power parity with China. An India with strong economy, modern industry, strong military and stable political system is the only requisite to be received by China on respectable terms. So for India to fix its relations with China, India should also fix itself.

Also note that territorial dispute and geopolitical differences shouldn’t be an obstacle for India in coupling with China for economic benefits. China always viewed America as a geopolitical foe but China also maintained economic coupling with America. The Mao’s era when China looked inward with socialistic experiments was a disaster for China. It was only when China started thinking global and outside of ideological shackles did it started to rise.

Donald Trump has shattered India’s illusions of joining the liberal club of Uncle Sam. Now India has to rethink its international policy. India should focus on developmental goals and economic necessities as basis of relationship with China and at the same time stabilize/reform its political system and strengthen its military. That is the pathway for stable relationship with China.