This quarter's edition of India's Foreign Policy Research Center journal has been published. It focuses on what Modi's current (and maybe his final) term in office will look like. My section, which appears on pp. 23-30, focuses on India and the United States, and the global struggle between democracy, capitalism, and freedom on the one hand, and authoritarianism, socialism/communism, and state slavery on the other. Enjoy.
1) Do you agree Trump as president is going to be great for India because he is Modi’s close friend?
When I first started writing these responses, Donald Trump had not yet assumed the presidency. A lot has happened since then including a meeting between Trump and Indian Prime Minister Narendra Modi that reinforced their close personal relationship and the importance of further strengthening the already strong US-India relationship. There are a lot of reasons why the Trump presidency will be good for India, which in turn means that it’s also good for the United States. We know that personal loyalty and a solid relationship are very important to President Trump and makes for better dialogue and ultimately agreements. Additionally, the two men know that they see governance in much the same way; and just as Trump won on an “America first” pledge, Modi won by putting “India first.” As Modi put it at the pair’s post-meeting press conference, MAGA (Trump’s Make America Great Again, and MIGA (Modi’s Make India Great Again) equals MEGA in what our two nations can do together.
Even as I write this, it’s hard to believe that Donald Trump has been in office for less than a month, given the breakneck speed at which he is taking important actions and the vitriol of his political opponents. Those actions also give us a sense of his priorities: first, domestic issues in how our government operates; then, the Americas; Israel and the Middle East; and we can expect that he will dissect the rest of the world’s issues over the next months and years, almost all of them with the specter of China in the background. At the very least, in less than a month, Trump has turned the geopolitical status quo on its head.
Many world leaders will be experiencing their first interactions with Donald Trump and he with them. We know they will start out formally and Trump‘s foreign counter parts are going to have a big job trying to figure out what he’s trying to accomplish and what he expects of them. That’s part of his successful operation. Some will develop good relations, others not. For India and Prime Minister Modi, those preliminaries happened years ago. Trump and Modi will be working from a position of understanding each other, knowing that they are supportive of one another’s efforts and similar in their goals; and understanding that India will be critical to the United States‘s plans to contain China in that part of the world.
The personal affection that Donald Trump and Narendra Modi feel towards each other exceed that of almost every other foreign leader, and might be as strong as that between Trump and Israeli President Benjamin Netanyahu with whom Modi also has close relations. That was on full display recently when Netanyahu even referred publicly to the unfriendly reception he received from former President Joe Biden, something rarely done in international politics, and something that pretty much everyone recognized. Netanyahu called Trump "the best friend Israel has ever had in the White House." If Modi is as good a negotiator and reader of geopolitics as he has demonstrated—and even Trump told the press that the Indian Prime Minister was a “tougher and better” negotiator that him—he should be able to say the same thing about India and Trump.
Modi recently had the opportunity to make his case to Trump in a way that almost no other world leaders will have. The fact that the two men share many of the same goals means that they both likely have been thinking about how their two countries can work together to attain them. Their personal relationship also will make it easier for the United States and India to address and resolve those thorny issues that otherwise could present an obstacle to good relations; for instance, India’s protectionist trade policies and America’s tariff threats.
As an American and a friend of India, I am anxious to see the progress and out of the box solutions that these two leaders agree to in their meetings. We’ve already seen a few (e.g., India unprompted taking back Indian nationals who immigrated illegally to the United States), and Modi invited Trump to visit India for a reprise of his first term’s “Howdy Trump.” Look for many more such events over the next few years.
2) Do you believe Trump’s early approach towards Beijing (inviting Xi for his inauguration) is not working either personally for Modi or strategically for India?
No, I do not believe that. Prime Minister Narendra Modi and Chinese President Xi Jinping have met at least 18 times during Modi’s tenure, according to the Times of India, with the first one taking place less than two months after Modi assumed the office of Prime Minister. These leaders know that one of the worst things for international relations, especially between countries whose interests are adversarial, is a lack of communication. Even during the depths of the Cold War, the USA and USSR continued to communicate at various levels. On at least one occasion, that communication might have saved us all from a nuclear holocaust. While President John F. Kennedy‘s 1962 military blockade of Cuba brought the Soviets to the negotiating table, hammering out the solution that eventually allowed the Russians to turn back instead of trying to defy the Americans and to dismantle the nuclear missiles in Cuba, required face-to-face negotiation. As we are seeing today, even when countries back down to another, it is critical for them to portray the event as a victory for themselves or their values. So the early Trump-Xi meetings only recognize the importance of the US-China relationship; just as the early Modi-Xi meetings recognized the importance of the India-China relationship.
There is wide bi-partisan consensus in Washington that communist China is America’s greatest adversary at the moment. The Republican and Democrat leaders of the US Congress’s Select Committee on the Chinese Communist Party have been united in calling for specific actions to do the influence of China in America. I remember being in Bangladesh once when that Committee’s top representatives from each party made the rounds of the international news talk shows. The people around me were impressed (and no doubt, somewhat surprised) that with all the talk of America’s political infighting, there was zero daylight between the parties on the importance of addressing these threats to the American homeland. Their understanding of the threat and how to defeat it was the same. (I know both major lawmakers and know that their positions are heartfelt, based on extensive intelligence, and not merely polite responses to make an impression on television.) So it should come as no surprise that the Chinese leader would be one of the first foreign heads of state that the new US president meets with early in his term. The meeting also reflects an understanding of the US China relationship being perhaps the world’s most consequential, though not the most important, in the immediate short term. For instance, China and India have engaged in numerous border clashes over the last several years, and although the types of weapon and rules engagement are intended to limit any conflict, it is never less a military to military encounter. But what might the potential consequences be if we started to see military to military clashes between the United States and China over, for instance, a US commitment to protect the territorial waters around the Philippines, something that the Chinese have challenged again and again? How many people would see that as a prelude to a Chinese invasion of Taiwan and a US response? How much global anxiety would it generate? Hence, the importance of Trump and Xi gaining these understandings early, so that minor fires do not turn into global configurations.
I would not read anything into these Trump-Xi meetings other than the importance of powerful adversaries making the effort today so that misunderstandings do not have horrible consequences tomorrow. There is zero chance that China will ever replace India as the United States’ key ally in Central and East Asia.
3) Trump has promised to impose heavy tariffs on Indian exports at a time when New Delhi is struggling with a record trade deficit. The US is India’s biggest goods importer and Trump’s actions are going to further dent India’s depressed economic growth under Modi. Do you agree? President Trump’s detractors like to act as if there is a simple one to one ratio for the impact of his policy—and that’s what we need to focus on: the policy and not specific tariffs. Tariffs can indeed raise overall prices, but there have been other times when other sellers reduced prices in order to grab market share. The Trump team also believes that the totality of their efforts to reduce government spending and incentivize US business, along with the additional revenue from tariffs, will overcome any price increase that might accompany new tariffs. There is another dimension to the tariffs. During Trump’s first term, they also led consumers to evaluate habitual purchasing patterns in light of the new realities. The US-China trade war caused some pain for both countries, but the impact on the US was marginal and temporary. On the other hand, it brought the Chinese economy to the precipice and caused the Chinese to fear the consequences of its renewal during Trump’s second term. President Trump frequently talks about “reciprocity” in trade relations and recently issued an order that US tariffs on a country’s exports to us will be the same as those imposed by the same country on their US imports. And that’s a good way to understand how he looks at entire tariff issue. He talks about how other countries have been taking advantage of the United States for years, for instance, closing off their markets to some of our goods and having total access to our markets free of any tariffs. And that conclusion resonates with most Americans. India has some exposure on that dimension, but Trump’s initial tariff efforts are not about that and helps put India’s situation in perspective.
His initial tariff wars were with countries in the Western Hemisphere, and with China. When some of those countries responded with or threatened tariffs in retaliation, the word from the White House and its allies was: ‘This is a drug war; they think it’s a trade war.” In every one of the cases (Canada, China, Columbia, Mexico, and Panama) Trump focused on specific harm that these countries were causing either in operating or allowing a deadly drug trade and other illegal activities such as human trafficking, or in abetting the massive illegal migration to the United States. The US-Canada border does not receive anywhere near the attention that the United States’ border with Mexico does, but it is become a major route for bringing illegal fentanyl and illegal immigrants into the United States. When Trump first threatened to impose tariffs on Canadian goods, Canadian Prime Minister Justin Trudeau responded that it would ruin the Canadian economy. Trump‘s reaction was that if Trudeau didn’t like it, Canada could always become the US‘s 51st state. While the media and others treated Trump‘s remark with the utmost seriousness, no doubt to fill a 24 hour new schedule or jump on another ideology-based rant, this clearly was a humorous response to let Trudeau know that his complaint about the effect on Canada would not affect Trump‘s decisions; and that the United States held the power in their relationship. Remember: America first.
If Canada has any leverage on the United States, it is most pronounced in the area of energy, where the US uses less expensive Canadian oil to backfill domestic supply, while selling its oil on the international market for full price. Otherwise, however, Canada is far more dependent on the United States than the United States is on Canada. So in the end, Trump agreed to pause the tariffs in exchange for Canada implementing a $1.3 billion CDN effort to control its southern border with the United States, interdicting fentanyl smugglers and illegal immigrants. The package included military material, such as drones and helicopters, as well as military personnel. It also agreed to appoint a fentanyl czar, and list Mexican drug cartels as international terrorist organizations. To delay US tariffs against her country, Mexican president Claudia Sheinbaum agreed to redeploy 10,000 Mexican National Guard troops to the border, which doubles the current numbers. A side benefit for both countries might be the fact that this helped establish a positive working relationship between the conservative Trump and the leftist Sheinbaum. Trump even praised her publicly, while continuing to dismiss Trudeau, who has since resigned his office. Columbia first agreed to take back its illegal immigrants from the United States, then reneged on the deal while the first flight of illegals within the air. Trump responded by threatening devastating tariffs that would continue to increase if Columbia continued to be non-cooperative; Columbia caved and has been taking in return flights of illegal immigrants. The concern with Panama was its agreements that gave China effective control over much of the Panama Canal. The Trump administration and many others in Washington and elsewhere view that as an unacceptable threat to national security and threatened tariffs. Trump even talked about the US taking back the Canal, which it gave to Panama during President Jimmie Carter's administration. US Secretary of State Mark Rubio negotiated directly with Panamanian President Jose Raul Mulina. The two agreed that Panama would not renew its agreement with China, focus significant additional enforcement efforts to stop illegal migration to the United States through the so-called Darien gap (the area essentially separating Panama and Columbia), and offer the United States it’s maximum security prison facilities (for what Trump called a very reasonable fee) to house violent illegal aliens and others. During his confirmation hearings, Rubio promised top focus on the western hemisphere and the US relations with its neighbors there; and these actions seem to be a big part in rebuilding those relations and both economic and political ties.
In the minds of most Americans, China is Public Enemy Number One and the force behind the deadly fentanyl problem in the United States. American and Chinese leaders have agreed to talk soon, though no date has been set. In the meantime, US tariffs have gone into effect, and China has threatened some of its own. By every indication, China is in a much more vulnerable position, vis-à-vis the United States and cannot afford this sort of trade war. Its economy is already on life-support. Another element of China’s retaliation was to harass several major US companies operating in China. This could backfire badly to China’s detriment, because China already is facing a mass exit of US companies, with India often a major beneficiary of that. So far, however, both United States and China have been moderate in their actions, which indicates that they both are hoping to find some negotiated resolution.
While India is not culpable for any of those problems and has started taking back its 18,000 illegal Indian immigrants; it does have significant exposure for tariffs. With all the change and all the progress that India has made during the tenure of Prime Minister Narendra Modi, it has made a little or no progress in the area of trade protectionism. According to the World Trade Organization (WTO), India had the sixth highest tariff average globally in 2017, 18.3%. No other world power even came close. China was the closest, coming in at number 90 with an average of 7.5%. The United States, by comparison, was all the way down at 140th with an average of 3.4%. By 2023, India’s average tariff remained largely unchanged at 17%, as did that of the United States, dropping to 3.3%. Now, if you were an American voter, would you think that’s equitable or to use Trump‘s word, reciprocal?
To his credit and insight, even before his meeting with Trump, Modi unilaterally reduced certain tariffs and eliminated barriers that have stopped US companies from entering the Indian market, which won him even more goodwill with the American people and our President. Plus, the matter could be put to rest with the imposition of Trump’s order setting US tariffs at the level of each trading partner. But that could have more complex impacts on India. The India-US relationship has many highly complex geopolitical and economic elements to it, including India taking in American companies formerly housed in China as part of an overall strategy. The two countries will take a more holistic approach to how they negotiate the various issues between them with trade protectionism being one element. It would be a bad mistake to think that Trump’s tariff threat is only a negotiating ploy. He is dead serious and will impose those tariffs if the two countries do not come up with an equitable alternative. Regardless of any negotiation, India will have to decide which issues are worth drawing a line in the sand which it will not cross. And trade protectionism is a big one.
Even though India is a great friend and important ally of the United States, its history of protectionism opens it to tariffs. So the question for India is if it wants tariff free trade with the United States, is it willing to end its own protectionism in exchange? In other words, the impact of Trump‘s trade policy on India is up to India. To what extent does it feel that it must maintain its current level of protectionism? Or does it believe that doing away with that system will have only a marginal impact on the Indian economy, while US imposed tariffs could have a very serious one. As we saw with Canada, complaints that tariffs will seriously hurt that other nation’s economy will not carry any weight with President Trump. After being told that the United States would impose 25% tariffs on Canadian goods, Prime Minister Justin Trudeau responded that such a move would destroy Canada‘s economy. Trump responded that if he didn’t like that, Canada could always become the 51st state of the United States. (While the media and others used Trump’s off the cuff remark with the utmost seriousness, no doubt to fill a 24 hour news schedule, it was clearly a humorous response to tell Trudeau that his complaint didn’t affect Trump‘s decisions.)
The question for India is if it wants tariff free trade with the United States, is it willing to end its own protectionism in exchange? In other words, the impact of Trump‘s trade policy on India is up to India. To what extent does it feel that it must maintain its current level of protectionism? Or does it believe that doing away with that system will have only a marginal impact on the Indian economy, while US imposed tariffs could have a very serious one.
4) How is India going to counter Trump’s threatened actions against BRICS’ plans for de-dollarisation? An idea India has been invested in, often exhorting countries to trade in local currencies.
Let’s be clear. If India pushes de-dollarization, it will place itself in direct conflict with the United States. Dumping the dollar as the global reserve currency, and getting out of the US dominated global banking system are the key components of de-dollarization and a major goal of America’s enemies. Preventing it is absolutely central to US security and, indeed, to President Trump‘s agenda.
It is important, however, that we get our concepts straight on this matter. In December 2024, Reserve Bank of India Governor Shaktikanta Das stated clearly that de-dollarization was “certainly not our objective.” He went out of his way to assure the United States that the idea of a BRICS currency replacing the dollar was a notion raised by one country. That country, by the way, was Brazil, whose policies are quite hostile toward the United States and certainly toward any element of US dominance. To be sure, India has furthered efforts toward "local currency dominated trade agreements," and I get that. My guess is that President Trump does as well. For as close as we might be in so many areas, India and the United States are two separate nations, whose interests are not always the same.
Discrete trade agreements that mandate local currency strengthen those currencies, reduce the risks associated with over dependence on any one currency, and makes the trading nations less dependent on the vicissitudes of any individual currency. That works for India, and it does nothing to undermine the dollar as the preferred international reserve currency, set up an alternative banking system, or replace the dollar as the world's basic unit of valuation. So like so many things, how all this shakes out will be a matter of negotiation; and both the United States and India have a lot of things that they can bring to the table in any negotiation. But, as in any negotiations, the parties must recognize what is not up for negotiation (in this case de-dollarization) and each party’s strengths and weaknesses (in this case with regard to global economic strength and retaliatory actions that each could take).
But it is important to reiterate that a misstep here could place the United States and India at severe odds. This is one of those issues that any US president will see as binary. To support the dollarization means to make common cause with the axis of authoritarianism (BRICS members Russia and China) and against democratic nations like the United States. Besides, no country or group of countries at this point have the economic muscle to do that against US opposition. Moreover, the Indian Prime Minister is savvy enough to know that neither the Chinese nor the Russians have a history of transparency or honesty in sticking to their commitments. So, at this stage at least, attempts at de-dollarization are doomed to fail.
But I don’t think we’re anywhere near that. Global trade and currencies are complex with a lot of moving parts that are not necessarily interdependent. There is a lot of room for negotiation,whereby India could lead a movement that strengthens local currencies, while not supporting dedollarization or the current international financial world order. Add to that the strong foundation for India-US cooperation.
5) What are the Opportunities for Cooperation during TRUMP 2.0 - MODI 3.0?
The 13 February meeting between Donald Trump and Narendra Modi was a real love fest. The post-summit press conference seemed to drip with words that consistently emphasized the importance of expanding ties between the two countries, and they announced a flurry of agreements that will do just that. In an important gesture, Trump announced that the US would extradite 2611 terror mastermind, Tahawwur Rana, to face justice in India, which also suggested that other accused terrorists (e.g., Khalistani terrorists) could face the same fate. The two talked about extensive technological cooperation and identified AI in particular as a critical area where both countries excel. While in Washington, Modi also met with Elon Musk, who has the technology by which India can develop and profit. While noting that the US is India’s largest trading partner, Modi set a target of doubling trade between the two countries. The two leaders even minimized any difficulties surrounding trade and tariffs, and made it clear that even on this important issue that has divided the two countries, there was a great deal of room for creative and mutually beneficial resolutions. One example announced after the meeting was India increasing US Liquid Natural Gas (LNG) imports to help reduce America’s trade deficit with India.
Undoubtedly, the two most significant areas of cooperation announced were defense and energy. In addition to the increased LNG purchases, India also agreed to increase its oil purchases and US involvement in a growing program of peaceful nuclear energy. The two countries clearly decided to intertwine US and India defense efforts through significantly increased purchases of US military hardware, including F-35 stealth fighters. The US has been very careful to limit F-35 sales, and their inclusion again indicated the importance and ever growing significance of India in US geopolitical calculations. President Trump has promised to negotiate an end to the Russia-Ukraine War. While his detractors charge that his recent actions show that he will be “rewarding” Russian President Vladimir Putin to get it done; they are being simplistic and more to the point partisan. Putin needs cash to pursue his war, and Indian purchases are key. But Modi agreed to increase US imports. And where does India currently get the largest part of its energy and military imports? Russia. This development is not lost on the Kremlin, which will find it even more difficult to prosecute the war with reduced coffers, and more amenable to giving ground in US-led negotiations. Here, too, though not usually mentioned in discussions about this European war, India plays an important role.
Arguably, the greatest threat that freedom-loving peoples face today is the axis of authoritarianism, arrayed against freedom and democracy. Democratic countries are led by the United States, India, Israel, and Europe; authoritarian countries by China, Russia, Iran, and North Korea. The primary argument those latter nations use to make their case for authoritarianism, is that democracy and the democratic process allow for too many discordant positions and power centers; that those discordant voices have to be given some credence in a democracy; and that they distract the government from pursuing its best interests. A system of state-led, top-down, authority that imposes its will on the people, they allege, is more efficient. So the best way to defeat this coalition is through military strength, and success in providing our peoples a prosperous and happy way of life.
Both the United States and India have interests in doing this at the highest levels. It is with pride that peoples of both nations refer to their countries as the world’s oldest and largest democracies, respectively. That is being threatened, and both countries are on the front lines of that conflict: China is the most serious adversary against the United States and its interests; China is taking the battle right to India’s borders as an immediate target of its maleficence. The good news is that India and the United States are pushing back against this attack, especially with both Trump and Modi in office. There is a general exit of US companies from China, and India is one of the places to which they are moving. This increased economic activity can be something of a quid pro quo for tariff reduction, as well as something that will further strengthen India’s economic growth. At present, it is the world’s fifth largest behind the United States, China, Germany, and Japan; having surpassed the United Kingdom and France. It will not be long before India overtakes Japan and Germany; and these US-India agreements should make that happen even sooner. Clearly, the United States is taking practical steps to support and aid India’s inexorable march to becoming THE dominant power in Asia. Perhaps that is the real opportunity India has during Trump 2.0 and Modi 3.0.
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