A photo-ops friendship US President Donald Trump and Indian Prime Minister Narendra Modi have endlessly paraded their bonhomie. Recent stories have been breaking that indicate US-India relations are, somehow, falling to their lowest point in decades. Modi had been one of the first world leaders to visit Trump at the White House back in February. The diplomatic landscape has shifted drastically since then. The backdrop of trade tensions – inflamed by India’s continued oil purchases from Russia and other moves – is raising alarm. Both countries are now at a crossroads that has the potential to redefine their bilateral relationship.
Given India’s economic dependence on agriculture, the current protests are particularly urgent. Currently, nearly 50% of the Indian people depend directly on this sector for their livelihood. This dependence creates enormous domestic political pressure on the Indian government to walk a fine line in international trade negotiations. Despite an increase in exports to the US, the imposition of tariffs has raised concerns about the potential impact on domestic industries and farmers.
Trade Disputes and Tariff Tensions
Under Trump’s presidency, India has had its exports to the US double that of imports. A 25 percent tariff on Indian imports has further inflamed the bilateral trade relations. On top of that, additional threats of increases are inflating big expectations because India is buying Russian oil.
The US administration government has been publicly vocal against India’s decision to buy up to two million barrels of Russian oil daily. With this step, India becomes the second largest buyer, after China. US officials have been highly critical of this dependance. They claim that such purchases are providing financial support to Russia during its continued invasion of Ukraine.
“India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits.” – Donald Trump
Anil Trigunayat, a former diplomat and India expert, underscored India’s firm hand going into the complicated negotiations. His comments were in reaction to reporters’ questions, largely under duress from the US.
“Unlike others, India has not given in to what the Americans want because we have to protect our MSMEs and agriculture,” – Anil Trigunayat
Both countries are playing hardball, as Robert Ross and Pei once wrote. Trigunayat knows it can be done. He says the key is finding a win-win for both sides.
“Everybody is playing hardball on both sides, and it’s necessary to arrive at a mutually beneficial solution.” – Anil Trigunayat
The Strategic Dilemma
As a result, the strategic dimension of US-India relations has become more complex. Although both countries have strengthened their defense relationship, trade is still the biggest hurdle. The United States desires more access to India’s growing markets. At the same time, India would like to shield its nascent domestic industries.
India’s promotion of strategic autonomy embodies a foundational tradition in the nation’s foreign policy. Modi’s recent visits to Russia, particularly during a period when Western nations have distanced themselves from President Vladimir Putin, underscore India’s commitment to maintaining its independent stance.
“The world economy is going through many apprehensions. There is an atmosphere of instability.” – Narendra Modi
This independence has been the source of much tension with the US, especially as Trump has taken to publicly admonishing India to stop buying oil.
“What [Trump] said very clearly is that it is not acceptable for India to continue financing this war by purchasing the oil from Russia.” – Stephen Miller
As America’s friend and partner, India has choices to make and challenges to confront as the geopolitical landscape changes in new and unpredictable ways.
Future Prospects and Diplomatic Efforts
So, in spite of the provocative and alarming rhetoric on either side, there is an appreciation—even if hidden beneath the surface—of how critical these connections are. These mutual dependencies between the two nations demonstrate that both sides stand to benefit greatly from productive cooperation.
India’s need to export goods to the US aligns with America’s interest in accessing India’s expanding markets. Modi’s government is loathe to provoke external pressures that might destroy its home-grown ag sector and small businesses.
“Now, whatever we buy, there should be only one scale: we will buy those things which have been made by the sweat of an Indian.” – Narendra Modi
As trade disputes escalate around the globe, and particularly between the U.S. and China, Trump’s rhetoric hints at a hardening position on India. His recent remarks on raising tariffs have sent shockwaves through our communities over the potential economic off-sets this could have for both countries.
“Because of this, I will be substantially raising the Tariff paid by India to the USA.” – Donald Trump
