Donald Trump has blinked on tariffs, but the influential American lobby in India has not. It is still in an overdrive in wholesale support of the US. Targeting worried corporate boardrooms, it is pointing to the light at the end of the dark tunnel of a conceivable bilateral trade deal by autumn. At another level, to generate optimism, it is hugely exaggerating a persuasive fantasy for the aam aadmi that the global trade war unleashed by the 47th US president represents an opportunity for India.
My experience of being professionally involved in US-India trade negotiations while working in Washington for 15 years belies hopes that a trade deal, trumpeted much—mind you, only on the Indian side—will be easy.
More than two decades ago, Frank G Wisner II, who was US ambassador to India—and later a lobbyist for New Delhi in Washington—tried to convince me that India and the US would soon conclude a free trade agreement (FTA). I did not buy his story. He then approached my chief editor, who promptly consulted me. Wisner was a consummate and clever diplomat who inherited many qualities of his father, one of the founders of the US Central Intelligence Agency. This was disinformation, which Wisner needed to spread at the time to promote himself. My newspaper did not pursue the story. The FTA, of course, is yet to fructify.
Fast forward to Trump’s first presidency. I was back in Washington as part of media preparations for his celebrated visit to India, which was to start in Ahmedabad. I became privy to official discussions between the US and India on trade negotiations ahead of the visit. The then US trade representative (USTR), Robert Lighthizer, was desperate for a deal during the visit. Like Wisner, he needed it for brownie points with his president. India would not agree. I listened to Lighthizer’s chief of staff, Jamieson Greer, plead with his Indian counterparts at appropriate levels for at least a “limited trade deal”. India’s commerce ministry firmly said no. Greer is the USTR, a cabinet job, in the new Trump administration. It will be surprising if he forgets or forgives India, as the same commerce ministry now pleads with him for an agreement by autumn.
Meanwhile, the new treasury secretary, Scott Bessent, told Sunday talk shows that 70 countries are in the queue for trade negotiations. He confirmed that Japan would get priority in negotiations because it is “a very important military ally... very important economic ally”. Bessent subsequently confirmed that trade talks have already begun with Ireland and Vietnam. Talks with Israel and Saudi Arabia are also likely. There is no room for India on that boat. Everything that India exports, Americans can get from elsewhere. So, it will need a miracle to push for the conclusion of talks on any trade agreement by autumn—unless it is entirely on Trump’s terms.
Now for the second myth being circulated: Trump’s worldwide tariff onslaughts represent an opportunity for India. If the DNA of India’s contextual establishment—business houses, bureaucracy, political parties and cheer-leading sections of the media—had been different, it could have been a huge opportunity. As a former finance and commerce minister, P Chidambaram asked a few days ago: Prime Minister Narendra Modi has “stooped, will he conquer?”
There are several pro-US camps in India that are painting Trump’s new tariff structure for India in the glorious colours of a windfall. Some outspoken media owners lead the view that by shaking up the somnolent global economic order, Trump is kickstarting opportunities for India. These are genuine reformers of long standing. They also have an unshakeable and touching faith in the omnipotence of the US. They argue from experience that only shocks and crises will persuade India to reform afresh, as in 1991.
Twenty-four hours after ‘Liberation Day’, when Trump announced his new tariffs, I watched in disbelief the president of the Federation of Indian Export Organisations, S C Ralhan, say with a straight face on prime-time television that “orders will soon start coming into India” for exports. He did not give any reasons. Many Indian corporate leaders who used to speak truth to power are dead. Most of the remaining ones either acquiesce in spreading economic falsehood or simply keep quiet.
The bureaucracy must always put on a brave front to strengthen the hands of the political leaders they serve. I once heard I K Gujral respond to a senior Indian Foreign Service officer who congratulated him on his trip to the US as prime minister. The trip had been a disaster and even Gujral knew this. “Tell me, has there been any trip abroad by any Indian prime minister that has not been a huge success?” Gujral sarcastically asked. The officer was speechless. The government’s public relations efforts on the nascent trade war are just that. Public relations. They are meant to keep up morale all-round.
Finally, there are sections of the media whose idea of reporting external events—both political and economic—is to faithfully reproduce government press releases or regurgitate official briefings without questioning them. These reporters are different from the media barons mentioned earlier, who have the conviction and intellectual wherewithal to campaign for reforms.
The cumulative result of all this is that the Indian people are not getting a full or factual picture of what lies ahead in Indo-US trade relations. A global review of reactions to Trump’s tariffs shows that, at the time of writing this, only four governments apart from India have said they represent new opportunities—Kenya, Tanzania, Ethiopia and Brazil. Singapore may be added. But their businessmen are not so sanguine. A leading Indian-origin investor in Kenya, Pankaj Bedi, told the media in Nairobi: “A temporary tariff disparity does not create real competitiveness.” There is a lesson for India in Bedi’s words.
The veil of secrecy that was pulled over the recent bilateral trade talks in New Delhi was not any negotiating strategy. It simply indicated total helplessness in moving forward with Trump’s commerce secretary and USTR. A crucial question is how India will balance its trade with the US after it cuts import duties.
K P Nayar | Strategic analyst
(Views are personal)