United States President-elect Donald Trump continues to embody his self-assigned title of “tariff man.” In the weeks leading up to his inauguration, he is focusing on some of the world’s rapidly expanding major economies.
Earlier this month, he specifically targeted the BRICS nations, warning them of potential 100% tariffs if they attempt to create a new currency or replace the US dollar with an alternative.
India, a key founding member of BRICS, plays a significant role within the intergovernmental group, which also includes China and Russia. Trump has previously criticized India, labeling New Delhi as a “very big abuser” of the bilateral trade relationship during a campaign rally in September.
During his first term, Trump imposed tariffs on steel and aluminum, which triggered a series of retaliatory actions. He also revoked India’s preferential trade status, eliminating a designation that had exempted billions of dollars’ worth of Indian goods from US tariffs, leading to significant discontent among Indian officials.
Trump maintains a cordial personal relationship Modi
Despite these tensions, the president-elect maintains a cordial personal relationship with Indian Prime Minister Narendra Modi. The two leaders expressed mutual admiration four years ago during Trump’s visit to Modi’s home state of Gujarat. Analysts suggest that this connection may benefit India during Trump’s upcoming term.
The other founding BRICS members—Russia, China, and Brazil—are often perceived as having “anti-American sentiments,” according to Harsh Pant, vice president of the Observer Research Foundation in New Delhi. “India remains one country which is not,” he noted.
New Delhi stands out among its peers, potentially placing it in a favorable position to dismiss discussions surrounding de-dollarization, according to experts.
This concept, which has been a long-standing goal for certain members, could theoretically lead the group to reduce its reliance on the US dollar by either creating a new currency or adopting an alternative. Such a shift could enable member nations to lessen their dependence on the greenback.
“The pressure from Trump on BRICS, warning against this path, actually provides India with greater flexibility,” Pant noted.
This situation allows India to advocate for a cautious approach to avoid inciting a strong reaction from the United States, Pant explained.
India’s Foreign Minister Subrahmanyam Jaishankar recently stated that the country has no intention of undermining the US dollar.
Worldviews of Trump and Modi align more
There remains significant pro-Washington sentiment in New Delhi. The dynamics of the relationship between the US and India are influenced by concerns over China’s rise and the perception of an impending confrontation between the US and the Asian powerhouse, as noted by some analysts.
“His first term was quite favorable, and the rapport he developed with Modi was beneficial for India, leading to the belief that a second term may not be as tumultuous,” Pant remarked.
During Trump’s initial term, he and Modi strengthened their personal relationship. In September 2019, Modi was celebrated at a rally in Texas called “Howdy Modi.” This gesture was reciprocated in February 2020 when 125,000 attendees gathered for the “Namaste Trump” rally in Ahmedabad.
Michael Kugelman from the Wilson Center’s South Asian Institute in Annapolis, Maryland, suggests that a future Trump administration might offer India a more favorable relationship compared to the Biden administration, particularly regarding issues like Ukraine and human rights.
Kugelman noted, “The worldviews of Trump and Modi align more closely than those of Biden/Obama and Modi.”
Regarding Ukraine, he pointed out that neither Trump nor Modi has publicly criticized President Vladimir Putin for the 2022 invasion, and both have recently advocated for peace. Trump has claimed he could resolve the conflict in 24 hours, while Modi expressed his willingness to facilitate peace during his visit to Moscow in July.
Alignment may not completely shield India
However, this alignment may not completely shield India from the potential challenges posed by a Trump administration.
Kugelman warned that a proposed universal tariff of 10% by Trump could affect India, particularly since India currently enjoys a trade surplus with the United States.
Data from the United States indicates that trade has significantly favored New Delhi in recent years, with the US importing approximately double what it exports to India.
India is increasingly recognized as a vital manufacturing center for companies like Apple, especially as it aims to diversify its supply chains away from China.
In the first ten months of this year, the US imported $73 billion worth of goods from India, while exporting only $35 billion to the country.
Kugelman and Pant concur that the trade imbalance will pose challenges for New Delhi, though they believe these challenges are manageable. It may, however, lead to a more transactional nature in discussions regarding deals or policies.
“This is typical of Trump’s approach, so even strategic allies like New Delhi will need to adapt,” Kugelman remarked.
Pant described Trump as “a deal maker,” emphasizing that negotiations revolve around reciprocity. He noted that a long-term policy framework must yield to more immediate, opportunistic strategies, focusing on what can be negotiated in the present rather than planning for the distant future.
He referenced a 2018 waiver granted to New Delhi by Washington concerning the Chabahar Port in Iran. This exemption was crucial after the reintroduction of sanctions on Iran, which prohibited US companies and foreign entities from engaging in business with the country.
New Delhi had entered into a 10-year, $500 billion agreement with Tehran to manage the port, which India views as a critical trade corridor to Central Asia and Afghanistan, circumventing its rival Pakistan.
The waiver was part of Donald Trump’s South Asia strategy. In a 2017 address, he urged India to provide greater economic support to Afghanistan, leveraging the strong trade relationship between the two nations as a negotiating tool.
“If you can clearly articulate your interests and engage in business with him, you might find yourself in a better position,” Pant noted.
India has shown an ability to balance maintaining a positive relationship with Trump while advancing its own objectives. Whether this approach can be sustained remains to be seen, but the outlook from New Delhi appears to be hopeful.
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