APDonald Trump is ruthlessly changing the global trade order, making new 'rules' and demanding complete surrender. Countries have two options: cave in or face punitive tariffs. Ad-hoc arrangements made under duress, posing as trade deals, may not materialise as expected, but they are good enough for optics and the headlines the White House wants.
Coercion, not conversion, is the preferred method. Apart from headlines, Trump is also using tariffs and the power of the US economy as a strategic weapon. If countries invest in the US in the grand numbers promised, America protects its pre-eminence and continues to maintain its technological edge.
Trump's tariffs and rhetoric against India have strained ties. Trust and confidence are at a low, reminding many of the bad old times. Those who helped build relations are 'gobsmacked', while those who view the US as unreliable are out in force. Those who couldn't stop railing against Xi Jinping as 'emperor' have taken to promoting more trade with China. India will find a new equilibrium in the triangle of the US, China and Russia in time, but right now it's rough weather.
As in 1998, when faced with sanctions, Delhi has reacted calmly without getting into a tit-for-tat with Washington. But there's no denying the shock and anger at Trump's punitive actions and gratuitous insults. It's time to buy more patience if you can't buy down tariffs.
What went wrong in trade negotiations for Trump to impose 25% tariffs on India and announce an unspecified penalty if Delhi continued to buy Russian oil? And why call India's economy 'dead' when the numbers tell a different story? Why target BRICS when India's presence prevents it from becoming an anti-West platform?
In short, it was the nickel-and-dime approach vs the big win. India was using the first, even if by Delhi's measure it had offered more than ever before, while Trump wanted the second - where he got billions in investments and headlines. Indian negotiators were working from small to big in the hope of forging a fair deal, the Americans from big to bigger with not a care for the other side. In the end, the number of rounds and video conferences didn't matter, nor did an early start - the gulf was too wide and Trump, the chief negotiator, was implacable.
Interestingly, there was optimism about a deal being announced just a few hours before Trump dropped the bombshell. Question is if India is continuing to read the signals wrong. The US side sees things differently. Americans claim they didn't think the negotiations 'ever' reached a point to be 'acceptable to the president'. Yes, there was a lot of back and forth, but GoI was 'trying to sell the same package over and over again'.
Agriculture was the main hold-up, but India's high tariffs were a major problem across the board, resulting in an impasse. It had to be either everything or nothing. The White House didn't want to do 'a half deal'. The only way was 'to cave in', as Japan and South Korea did, one insider said bluntly.
Brutal and extractive? Yes, but that's exactly how Trump likes it. There isn't a whole lot of sympathy for India on trade. Here's this week's version: 'India's agriculture sector is dead weight. It's holding the country back.' Besides, there's 'no meaningful investment in skill development'. IITs are one end and substandard colleges the other. There's nothing in between. India should focus on internal reforms and channel energies at home.
Another issue waiting to explode is H-1B visas, with Trump acolytes such as Charlie Kirk openly talking about ending them altogether. On Sunday, Stephen Miller, Trump's top political aide, accused India of 'a lot of cheating' on immigration policies, besides 'financing' Russia's war.
US trade officials were surprised when Trump threw Russian oil into an already volatile mix with India. It seems someone got his ear at the last minute. You can make an educated guess, for there is a bill being negotiated that punishes countries buying Russian products. Except fertiliser, maybe. The US is one of the largest buyers of Russian fertiliser - last year, it paid Moscow $1.3 bn for various types.
By the way, a phone call from Modi wouldn't have made a difference, as per conventional DC wisdom. Japanese and South Korean leaders didn't call, but their negotiators gave Trump big wins. As did Pakistan. Exploring for oil on the coast is only the latest trick from a country that has 'sold' many oil and gas pipelines to the Americans in the past.
Coercion, not conversion, is the preferred method. Apart from headlines, Trump is also using tariffs and the power of the US economy as a strategic weapon. If countries invest in the US in the grand numbers promised, America protects its pre-eminence and continues to maintain its technological edge.
Trump's tariffs and rhetoric against India have strained ties. Trust and confidence are at a low, reminding many of the bad old times. Those who helped build relations are 'gobsmacked', while those who view the US as unreliable are out in force. Those who couldn't stop railing against Xi Jinping as 'emperor' have taken to promoting more trade with China. India will find a new equilibrium in the triangle of the US, China and Russia in time, but right now it's rough weather.
As in 1998, when faced with sanctions, Delhi has reacted calmly without getting into a tit-for-tat with Washington. But there's no denying the shock and anger at Trump's punitive actions and gratuitous insults. It's time to buy more patience if you can't buy down tariffs.
What went wrong in trade negotiations for Trump to impose 25% tariffs on India and announce an unspecified penalty if Delhi continued to buy Russian oil? And why call India's economy 'dead' when the numbers tell a different story? Why target BRICS when India's presence prevents it from becoming an anti-West platform?
In short, it was the nickel-and-dime approach vs the big win. India was using the first, even if by Delhi's measure it had offered more than ever before, while Trump wanted the second - where he got billions in investments and headlines. Indian negotiators were working from small to big in the hope of forging a fair deal, the Americans from big to bigger with not a care for the other side. In the end, the number of rounds and video conferences didn't matter, nor did an early start - the gulf was too wide and Trump, the chief negotiator, was implacable.
Interestingly, there was optimism about a deal being announced just a few hours before Trump dropped the bombshell. Question is if India is continuing to read the signals wrong. The US side sees things differently. Americans claim they didn't think the negotiations 'ever' reached a point to be 'acceptable to the president'. Yes, there was a lot of back and forth, but GoI was 'trying to sell the same package over and over again'.
Agriculture was the main hold-up, but India's high tariffs were a major problem across the board, resulting in an impasse. It had to be either everything or nothing. The White House didn't want to do 'a half deal'. The only way was 'to cave in', as Japan and South Korea did, one insider said bluntly.
Brutal and extractive? Yes, but that's exactly how Trump likes it. There isn't a whole lot of sympathy for India on trade. Here's this week's version: 'India's agriculture sector is dead weight. It's holding the country back.' Besides, there's 'no meaningful investment in skill development'. IITs are one end and substandard colleges the other. There's nothing in between. India should focus on internal reforms and channel energies at home.
Another issue waiting to explode is H-1B visas, with Trump acolytes such as Charlie Kirk openly talking about ending them altogether. On Sunday, Stephen Miller, Trump's top political aide, accused India of 'a lot of cheating' on immigration policies, besides 'financing' Russia's war.
US trade officials were surprised when Trump threw Russian oil into an already volatile mix with India. It seems someone got his ear at the last minute. You can make an educated guess, for there is a bill being negotiated that punishes countries buying Russian products. Except fertiliser, maybe. The US is one of the largest buyers of Russian fertiliser - last year, it paid Moscow $1.3 bn for various types.
By the way, a phone call from Modi wouldn't have made a difference, as per conventional DC wisdom. Japanese and South Korean leaders didn't call, but their negotiators gave Trump big wins. As did Pakistan. Exploring for oil on the coast is only the latest trick from a country that has 'sold' many oil and gas pipelines to the Americans in the past.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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