The world knows that US President Donald Trump is unpredictable. So his latest jibe calling India ‘tariff king,’ desperate to cut a trade deal to ‘please him’—coming weeks after praising us at the UN for pulling out millions from poverty—confirms his penchant for undesirable contradictions. Last year, he called India a ‘true friend,’ and Narendra Modi a ‘good prime minister,’ but disapproved our fondness for protectionism, criticising India for ‘100 per cent tariffs’ on Harley Davidson motorcycles. However, the American president’s ire directed at New Delhi so far has been symbolic sans real economic or financial fallout. It is important to ensure the status quo persists.
The US is India’s single largest trading partner, with the two-way annual trade in excess of $140 billion. Trade surplus at $25 billion is crumbs on the table, compared to China’s nearly $350 billion. Yet, any Indo-US trade war can puncture growth and shake up markets, which tremble at the mere mention of it. As it is, the threat to the skilled Indian IT workforce looms large, while the US Big Pharma is lobbying hard for extended patent protections on new drugs, which effectively will choke our generics makers and make drugs expensive. Trump’s beef with New Delhi is partly on account of India locking horns with the US at the WTO. Hence, the onus lies on the government to iron out differences, without compromising on strategic ties.
Given the election season, Modi needs plenty of good luck, but cannot compromise on traditional niceties of diplomacy. If Trump’s ploy is to force India to sit across the table, New Delhi shouldn’t buckle under pressure for America’s sake, even if it dangles waivers ahead of India’s planned purchase of Russia’s S-400 missiles, or compensation for our oil supplies from Iran. Theoretically, a trade war can have one beneficiary, but in reality all end up as victims. India must show a little spine in order not to sacrifice its rising global stakes.