The ongoing deterioration in US-India ties hit a new low on Wednesday when US President Donald Trump decided to issue an executive order imposing an additional 25 per cent tariff on Indian goods citing New Delhi’s continued imports of Russian oil. The latest tariff escalation has effectively doubled the overall tariff rates on Indian exports to the US to 50 per cent, sharply escalating tensions between the two countries after trade talks collapsed. The tariff shock has reportedly created waves of insecurity in major exporting industries and US consumers have already started to cancel or withhold orders. Exporters are now trying to persuade the Indian government to provide immediate fiscal relief and are urging the restarting of stalled trade negotiations. While purchases of Russian oil by India appear to be the immediate reason for the tariffs, it has been reported that trade talks with the US also broke down because of disagreements on opening India’s large dairy and farm sectors. Indian PM Narendra Modi remains defiant about not compromising on the interests of the country’s farmers, but the new tariff rates threaten to significantly erode India’s trade competitiveness, with other countries in the region, including Pakistan, facing much lower US tariffs. But while new trade negotiations may blunt some of the impact, one thing that will likely not recover so quickly are India’s ties with the US and, with it, all the diplomatic and geopolitical clout it had built up over the past decade or so.
While much of the Indian opposition’s response to this development has involved criticising the tariffs themselves, with its leader Rahul Gandhi terming them ‘economic blackmail’ and others calling for India to retaliate by mimicking the US rates, the moves will undoubtedly weaken the standing of an increasingly shaky BJP government. PM Modi and co had already lost their parliamentary majority in elections last year and while they did well in the Delhi legislative assembly elections in April-May, this was before their credibility took a battering at the hands of Pakistan and the failure of Operation Sindoor. The loss to Pakistan was preceded by the ouster of the India-friendly Sheikh Hasina regime in Bangladesh, and the new setup there is unlikely to forget her close ties with India and seems much more open towards Pakistan. And now the US president is calling India a ‘dead economy’ and hitting it with some of the steepest tariffs in the world while inviting the Pakistan army chief for lunch to the White House. It has simply been a year of one failure after another on the global stage.
It was not meant to be so. India’s ties with India were getting warmer by the year and the return of Trump to the White House, who was generally favourable towards India during his first term, was meant to take the increasingly close US-India relationship to new heights. On paper, it looked like both MAGA and Hindutva had a lot of common enemies and a similar myopic, reactionary and xenophobic approach to politics in their respective countries. However, it is always a danger to put all of one’s eggs in one basket and India seems to have relied too heavily on good relations with the US under Modi and is now paying the price. Its jingoistic behaviour has alienated potential alternatives like China who are now playing a much bigger role than the US in the South Asia region. There are lessons in this for Pakistan. While warmer ties with the US should not be shunned, we should not repeat India’s mistakes and always keep the increasingly erratic nature of US policy in mind. It is also important to remember that strong ties with countries in the immediate region must come first and should not be compromised. This is not to say that good ties with the US do not matter but the world revolves less and less around the West and a more flexible strategy is needed in these times.
