[Trump’s World] - India: "The Theory of the United States’ Decline Is a Joke"

Institut Montaigne - How does India respond to the trade war initiated by the White House? What impacts can we expect on India’s economy and politics? 

India had anticipated the trade war and was fully aware that customs barriers would be a major issue under the new Trump administration. It was rather well-prepared to engage in tough negotiations, especially given that Delhi had learned lessons from the experience between 2016-2020. In his book No Trade Is Free, Robert Lighthizer, U.S. Trade Representative from 2017 to 2021, who traces the history of U.S. customs policy over four decades, acknowledges India as a difficult negotiator.

In parallel, Donald Trump was also better prepared. He announced that tariffs on India would rise to 26%, with additional duties on steel and aluminum. For Delhi, this issue was substantial: India’s trade surplus (goods and services) with the United States amounts to $46 billion. Delhi responded on May 26, threatening to raise tariffs on a range of U.S. products.

Yet, on February 13, Narendra Modi and Donald Trump had issued a joint statement announcing the strengthening of cooperation between the two countries in various domains and committed to negotiating a customs agreement without delay. India launched discussions on this topic in the week following the meeting. Since Liberation Day on April 2, Delhi has been one of the world’s most proactive capitals in conducting negotiations. The agreement was expected to be finalized by July 9, as Scott Bessent, the U.S. Treasury Secretary, had indicated. India waited until the last moment for a positive announcement from Trump; what it got instead was a tariff rate of 25 per cent and an extra unspecified rate targeting India’s Russia relationship. While this is undoubtedly a major set back, India has reacted calmly and expects the negotiations with the US to continue.

IM - Can we consider that the Trump II administration is pursuing a specific policy towards India? Is India a strategic partner and considered a counterbalance to China? 

While trade negotiations with the US remain a major challenge, there are significant continuities with the first term: emphasis on the Indo-Pacific, China as a top strategic challenge. The Biden administration had continued the course set by Trump I. The February 13 joint declaration between the United States and India highlights all the points of convergence that allow for constructive progress: one might think that trade issues, in the end, remain relatively secondary.

But that would be an illusion: Donald Trump may view China and Russia as potential allies, as well as rivals, which forces us to not underestimate the deep oscillations in his doctrine, regardless of appearances.

Donald Trump has a dual approach to China: on the one hand, he wants to counterbalance Beijing’s weight. On the other hand, he seems willing to negotiate. The outcome will depend on how the trade policy and defense issues-both in Europe and Asia-are prioritized.

For now at least, Donald Trump seems to have clearly decided that commercial issues take precedence, placing them well above security concerns. The Asians are beginning to realize this. The campaign by Japanese Prime Minister Shigeru Ishiba for his country's senate elections on July 20 (which his party lost) is very revealing in this respect: he repeatedly spoke of "strategic autonomy." For a Japanese politician to speak like a French one shows how much the world has changed...

The predominance of trade issues, and the obsession of the United States to force its allies to spend 3.5% of their GDP on defense, could be detrimental to them. The Japanese and Australians have already announced that this target is unrealistic for them-only the Europeans rush to convert their education budgets into military spending!

Historically, the United States has used its trade policy to support its strategic alliances, but it seems now that those alliances are conditioned by commercial gains.

The situation is different in India, since it is not a historical ally of the United States: the Indians are not as shocked as the Europeans or Japanese might be. Need to negotiate tariffs? Fine, we’ll negotiate. For an independent power like India, there’s no need to try to please the United States by citing some old friendship.

There is no structural change in the Indo-American relationship. Certainly, Delhi will seek more opportunities with Europeans. Certainly, Delhi is concerned about the warming of relations between Washington and Islamabad. Whereas Pakistan was once considered a hostile country, accused of being on the side of Afghanistan, Trump now seems to view Pakistan more favorably. Far from accusing it, as in 2019 over the Jammu and Kashmir events, of being responsible for the conflict, he called on both Delhi and Islamabad to reopen dialogue without taking sides after the May 7 terrorist attacks in Kashmir. Narendra Modi was very upset and strongly condemned the U.S. position, accusing it of treating India and Pakistan on an equal footing. But all this remains rather marginal in the bilateral balance. Trump wants to appear as a "peacemaker," and the recent April visit of Steve Witkoff’s son, Zachary Witkoff, to Islamabad on digital finance issues (Zachary is the founder of the cryptocurrency firm World Liberty Financial, in which the Trump family holds 60% of the capital) may explain a temporary warming of the White House’s position. However, it has no real choice but to side with Delhi or Islamabad: the economic power balance is heavily in our favor, especially since Pakistan has its own issues with China! The views of Delhi and Washington are convergent at the structural level on geopolitical issues, especially in Asia and the Indo-Pacific.

IM - In Europe, the debate is quite intense between those advocating an offensive and firm stance-on the grounds that Donald Trump would perceive any desire for appeasement as a sign of weakness and would harden his demands-and those who favor conciliation. How does India position itself? 

RM -India believes that a conciliatory posture is currently the best one to adopt, but it should not last too long, and we are ready to respond with whatever firmness is necessary. Public opinion is also prepared for this.

The trade balance is highly unbalanced, posing a significant problem. Lifting trade barriers in Asia has not been a conclusive experience, and India does not want to excessively develop free trade with Asia. Protective measures, however, are not always the solution: we are seeking trade partners, as evidenced by the agreements concluded with Australia (in April 2022) and most recently with the United Kingdom (on July 24), and we have a vested interest in allying with the Europeans: the Indian and European economies are complementary, whereas Indian and Asian economies are competitive... Some socialist ideologues push doctrines that make it seem as though "all Asians are brothers"-this beautiful principle, if applied to the economy, would be disastrous! The security threat to us comes, first and foremost, from China, and there is therefore potential for agreement with Europeans. For the rest, we are waiting to see how U.S. positions evolve.

Where India must cautiously suspend judgment is regarding the potential change in Washington's relationship with Moscow: the principle of continuity may not prevail...

IM - This is a crucial point: we observe a kind of divorce between the geopolitical goals of this administration-preventing China from building its hegemony-and its trade policy, which seems to antagonize America’s allies. How likely is it that these two issues will be reconciled in the long term? Moreover, you emphasize the continuity of the American administration, but that’s precisely where the problem lies: the White House does not seem to know exactly what it wants.

RM - You know, in politics, nothing lasts… The way the US functions in Trump’s power structure doesn’t seem all that exotic to us Indians: Narendra Modi’s governance style, where he has full control over his party, is somewhat similar. Above all, let’s remember one thing: Trump’s power depends on a narrow majority, both in the Senate and in Congress. Will it last beyond the midterms? It’s unlikely. The current American political moment might be-probably is!-just a passing phase. The MAGA movement wants to demolish the administration-the "deep state"-but resistance is strong, and the divisions, which we’re already seeing, will only grow. All we need to do is let the internal situation of the United States rot, and wait…

IM - Do you think the rise of illiberalism is a factor to be taken into account, including in India? 

RM - Westerners believe they have the right to judge other democracies, and they’re always the first to lecture. But when the West tries to improve things elsewhere, they only add to the chaos. Just look at Iraq! In Afghanistan! The ideology of messianic civilization must come to an end, and everyone should fight their own battles. Especially since Western democracies are far from living up to their lofty ideals: the United States has been preaching the good word for decades, but its democracy is eaten up by racism and inequalities… No one dares show them a mirror because they are the strongest. On this point, I place both Europeans and Americans in the same bag. But it’s high time everyone recognized their limits with more humility, focused on their internal politics, and stopped giving democracy lessons to others.

IM - However, it seems hard to separate trade negotiations from the state of governance and the political or ideological orientation of a government. To say that Donald Trump neglects human rights to focus on trade relations is false, or at least it may be true everywhere else in the world, but not in Europe! He is actively trying to destabilize our democracies and help far-right movements rise to power on our continent. 

RM - It’s true that the "transactional method" mainly applies to non-Western countries, and the United States’ involvement in European soil serves ideological purposes, like in Poland, where they supported the ultraconservative Karol Nawrocki, who won the presidential election, or with the AFD in Germany. But all of that is a matter for Western countries, and it doesn’t concern us. Freedom of speech, LGBTQ rights-those are your battles. It’s up to you to manage American interventionism and deal with the reversal of U.S. policy. Elsewhere, Americans are stepping back from ideological efforts: On July 1st, Secretary of State Marco Rubio praised the closure of USAID, which, according to him, will allow relationships to be based on trade, rather than aid-which is often conditioned on respecting certain values promoted by the U.S. government.

IM - Isn't Donald Trump weakening his country? Does this create space for a middle-power alliance that could stabilize strategic balances? Or, on the contrary, are we heading toward spheres of influence? 

RM - Donald Trump’s agenda can be summed up in three points:

• There is too much immigration in the United States.
• Globalization has harmed American interests. This marks a break from the traditional partisan doctrinal stance of the Republicans, who are now against globalization.. 
• There is no valid reason for Americans to be engaged in endless wars that don’t concern them. Defending Europe, supporting Japan and Korea-these things make no sense for the United States. The roots of Trump’s revisionism lie in the adventurism of the globalized elite, and he calls for a return to a more grounded conservatism that’s also more pragmatic.

Does this mean Americans are weakening? It’s not certain that they’ll come out of their trade war more vulnerable. The world is so dependent on relations with the United States that we will eventually accept all their terms.

There’s also room for new coalitions of middle powers, as long as they’re not anti-American coalitions! Middle powers like India that are part of BRICS countries (other than China and Russia), need to work more closely with the European Union, Australia, Japan, and South Korea-that’s undeniable-but the U.S. remains at the center of the world, and the theory of its decline is a joke. What we are witnessing is not a decline of the US ( or the West), but a rearrangement of the terms of endearment within the West and a repositioning of the US to improve its leverage with other powers.

Interviewed conducted by Hortense Miginiac
Copyright image : Alan-Ducarre.