Trump attacks India on trade even as US seeks its help on China

US President Donald Trumps attempt to pressure India on trade may be intended as a symbolic shot across New Delhi’s bow, but its inopportune timing threatens broader political consequences.

The Trump administration notified Congress on Monday that it wants to scrap trade concessions for India, the largest beneficiary of the so-called generalised system of preferences that impacts $5.7 billion worth of goods.

The move affects just a fraction of India’s trade flows, yet it comes weeks before India’s national elections, and just as Prime Minister Narendra Modi’s government is trumpeting its foreign policy prowess and military strength following a stand-off with Pakistan.

Both Trump and Modi likely hope to isolate thorny trade issues from their geopolitical ties as both countries position themselves in Asia against an increasingly assertive China. But even assuming the strategic alliance — which includes the so-called Quadrilateral Security Dialogue between the US, India, Japan and Australia — remains intact, the worlds two largest democracies are probably still headed for a bout of turbulence.

Even if Modi doesn’t want to raise the temperature, the discourse in India has been that America needs India to balance China, said Harsh Pant, an international relations professor at Kings College London. “And the question will be: Why is America doing this to India?"

“The US move, announced at the same time as a halt on the same trade preferences for Turkey, could reignite dormant anti-American sentiment within India and is likely to fuel opposition critiques of India’s ruling government,” Pant said.

Trade pressure

“Needling India on trade will have a corrosive effect on Modi’s views of the US and fits a pattern of Trump’s focus on narrow trade grievances at the expense of broader strategic concerns,” according to John Blaxland, head of the Strategic and Defence Studies Centre at the Australian National University. “It is extraordinary how Trump manages to demarcate trade from geopolitics, when in the real world they are intimately linked,” Blaxland said.

“That extends to the US pulling out of the Trans-Pacific Partnership trade deal that would have more closely tied Asian economies to Washington, despite pleas from regional allies such as Japan to reconsider,” Blaxland added. The TPP was dismissed, just as trade links with India and Turkey now appear set to be discarded, he said.

“Trump’s removal of trade concessions are not entirely unwarranted, coming after Indian customs duty hikes, expanded import substitution rules and domestic price caps,” according to Richard Rossow, Wadhwani chair in US-India policy studies at the Washington-based Centre for Strategic and International Studies.

US pressure

However, the current spat follows previous US attempts to pressure New Delhi to draw down significant oil imports from Iran, as well as Venezuela. India — whose history of non-alignment gives it close economic partners that make Washington policy makers uncomfortable — has nevertheless increased oil, natural gas and coal imports from the US

Trump has pressured other allies on trade — notably Germany, as well as the European Union and South Korea — while maintaining security relationships. But the US-India alliance has far more fragile foundations, making the fallout from the scrapping of preferential trade concessions more volatile.

“US-India ties are more of a collaboration of convenience,” said Nick Bisley, an international relations professor at Melbournes La Trobe University. This could be used by the foreign policy elite in India to say, “Don’t get too close to the US.”

Especially as the Indian election approaches, Trump’s decision could well get sucked into the febrile campaign atmosphere of domestic politics. “The optics of this are bad, because it comes at a sensitive time,” said Pant of Kings College, London. “While unlikely to hurt broader bilateral ties, with elections in just a couple of months, I don’t think the Indian government would like to be seen buckling to American pressure.”

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