Trump gets importance by meeting strong foreign leaders just before the election. Israeli Prime Minister Benjamin Netanyahu and Hungarian Prime Minister Viktor Orban met him in July. A meeting with Modi will bring him more importance. But India’s ministry of external affairs has refused to confirm or deny a potential meeting between Modi and Trump on the sidelines of the Quad summit.
Speaking at a campaign event in Flint, Michigan, a few days ago, Trump mentioned his meeting with Modi while discussing US-India trade relations. “He (Modi) happens to be coming to meet me next week, and Modi, he’s fantastic. I mean, fantastic man,” Trump said.
But Trump also spoke of US-India trade relations and called India a “very big abuser” of tariffs. This is not the first time Trump has criticised India on tariffs. As president, he had raised the issue of high tariffs on Harley-Davidson motorcycles. However, he had a positive chemistry with Modi during his term as president. Trump’s off-the-cuff, rambling and incoherent comments show his mixed approach to India.
Trump-Modi chemistry
A day after Trump announced that Modi would meet him next week, a close aide spoke about the strong relationship between the two leaders. Al Mason described their “warm relations” and mutual respect, pointing to their shared commitment to building strong international ties.
Mason reflected on the thriving US-India relationship during Trump’s presidency from 2017 to 2021. He recalled significant events such as the “Howdy Modi” rally in Texas, which drew over 50,000 attendees celebrating the partnership, and Trump’s visit to India in 2020, where Modi hosted a massive rally at the world’s largest cricket stadium in Ahmedabad.”They still recollect Trump’s outreach during his presidency, to bolster the historic relationship between the United States and India, and to reach out to Indian American communities within the United States on a more personal level during his tenure as a president,” said Mason. He also mentioned the strong support Modi enjoys from the Indian American community, which remembers Trump’s efforts to enhance ties between the two countries. “The Indian American community largely credit Trump for deepening the ties between the two nations,” Mason said.
Trump’s criticism of India’s trade practices
Iconic Harley-Davidson motorcycle became Trump’s reference point for criticising what he saw as a lopsided trade relation with India. Last year, Trump again raked up the issue of high tax by India on certain American products, in particular the Harley-Davidson motorcycles, and threatened to slap reciprocal tax if voted to power again.
During his first term as the US president, Trump described India as a “tariff king” and in May 2019, terminated India’s preferential market access — Generalised System of Preferences (GSP) — to the United States alleging India has not given the United States “equitable and reasonable access to its markets.” Trump had also raised import duty on Indian steel and aluminium products. India too raised import duties on several American products. In an interview in August last year, Trump came down heavily on India tax rates, which he alleged were quite high.
American hypocrisy on tariffs?
Trump’s claim that India is an “abuser” of import tariffs is unfair as many nations including America protect their domestic industries by imposing high customs duties on certain products, think tank GTRI has said.
The GTRI that according to WTO’s World Tariff Profiles 2023, the US also imposes high duties on items like dairy products (188 per cent), Fruits and vegetables (132 per cent), Coffee, tea, cocoa and spices (53 per cent), Cereals and food preparations (193 per cent), Oilseeds, fats and oils (164 per cent), beverages and tobacco (150 per cent), Fish and fish products (35 per cent), Minerals and metals (187 per cent), and Chemicals (56 per cent). These numbers demonstrate that the US also protects specific products of its economy with high tariffs, GTRI said in a report.
“Trump’s argument singles out products with the highest tariffs while neglecting the average and trade-weighted tariffs that better represent India’s trade policy,” GTRI Founder Ajay Srivastava said. India’s average tariff rate of 17 per cent is higher than the US’s 3.3 per cent, but similar to other major economies like South Korea (13.4 per cent) and China (7.5 per cent), he said.
Srivastava said despite India’s willingness, the US has been reluctant to reduce tariffs through FTAs. If the US is keen on zero-tariff access into the Indian market, it should consider negotiating a free-trade agreement with India, he added.
Will Trump be good or bad for India?
A recent report by market research firm Nomura, which assesses the impact of Trump 2.0 on the US economy, geopolitics, financial markets and rest of the world, with a deep-dive into Asia, says Trump will be favourable for India despite his tough stance on trade and dollar.
The report identifies two sources of trade friction between India and the US under a Trump presidency. First, India runs a trade surplus with the US, which might face scrutiny under Trump 2.0. Second, the Trump administration may look to take punitive steps against trading partners deemed to be artificially weakening their currencies. However, the report says, these two short-term disruptions are likely to be offset by America’s China Plus One strategy of shifting supply chains away form China to friendly countries such as India. This policy is likely to gather steam under Trump.
However, India could be adversely affected by tighter immigration policies, the report says. Indian nationals received the highest number of work visas from the US, accounting for over 72% of the visas issued in FY23. Many analysts think due to India’s unique geopolitical situation, it will be able to manage its interests whoever comes to power in the US. Under the Biden presidency, India-US ties strengthened despite initial concerns. Nomura analysts say India is likely to benefit on the foreign policy front under Trump 2.0.
(With inputs from agencies)