&w=3840&q=100)
Tariff tirade to Cold War: Trump risks undoing 3 decades of India-US partnership
US President Donald Trump speaks with the press as he meets with Indian Prime Minister Narendra Modi in the Oval Office of the White House in Washington, DC, on February 13, 2025. (Photo: Jim Watson/AFP)
For more than three decades, Indian and American leaders pursued a mutually beneficial relationship that built upon common grounds and sought middle grounds in case of divergences. But the principle of mutuality that underpinned the India-US relationship has now ended.
With 50 per cent tariffs, unending verbal attacks, unleashing his minions to insinuations lacking factual bases, and a burgeoning alliance with India's adversaries, Trump has made it clear that he is not seeking a negotiated trade agreement but wants India to accept his diktats without question — and that he is up for getting his hands dirty in this pressure campaign.
STORY CONTINUES BELOW THIS AD
It is this approach, and not any unmanageable differences on trade or foreign policy, that has driven the India-US relationship to the lowest point in decades.
Firstpost has learnt that India-US trade talks were going well until Trump abruptly dumped the progress and ramped up his demands to unrealistic levels.
Even as Trump has claimed himself to be a master dealmaker, Firstpost has learnt that he has been a fickle in trade talks and has not been consistent in his terms.
India-US trade talks were going well — then came Trump
In July, Indian and American negotiators were close to finalising a draft for a trade agreement well ahead of the August 1 deadline, but Trump ramped up his demands out of nowhere and blew up the progress, Firstpost has learnt.
It is not clear if it was a draft for the final trade deal or a 'mini deal' that negotiators were said to be looking forward to at the time.
Firstpost learnt that India offered certain relaxations in trade talks, which would have helped American businesses, but that was not enough for Trump.
It is understood that these relaxations concerned regulatory and compliance matters that would have created an enabling environment for American businesses looking to enter India. It is not understood to be acceptance of American demands on contentious issues like agriculture, dairy, and genetically modified (GM) crops.
STORY CONTINUES BELOW THIS AD
Firstpost has also learnt that Trump was fickle in trade talks, offering India tariff rates of 10 per cent, 15 per cent, and 19 per cent at various points.
ALSO READ: With tariffs & threats, Trump dashes hope of being India's top partner
Such an unpredictable manner in serious bilateral trade pact talks suggests that President Trump is not negotiating in good faith and wants all gains from a deal for himself instead of a win-win deal, according to Ram Singh, a professor of international trade and business at the Indian Institute of Foreign Trade (IIFT).
'India has always valued its autonomy. India will not agree to an unequal trade deal like Japan or South Korea, which are dependent on the United States for security. The current trade tensions and the way US officials have conducted themselves in unprecedented. Previously, they understood Indian positions. Now, they have a 'my way or the highway' approach and want everything for themselves,' Singh tells Firstpost.
STORY CONTINUES BELOW THIS AD
Trump risks decades of progress in India-US ties
In India, Trump is already being compared to late Richard Nixon, the disgraced Cold War-era President of the United States who sided with Pakistan and deployed the 7th Fleet of the US Navy to intervene in the India-Pakistan War of 1971 on the side of Pakistan.
That episode is seared into the Indian public memory and continues to serve as a reminder that the India-US relationship, which has become central to India's foreign policy, is not as old as it might appear. Instead, it is quite young — just over three decades old.
With his tariff war and systematic undermining of India, Trump has put at risk the progress made post-1990s by all the presidents and prime ministers.
President Trump has broken the trust in the India-US relationship, and it will take time and efforts on part of the Americans to rebuild trust, and the responsibility would likely fall on the next administration, says Yusuf Unjhawala, a scholar of geopolitics at the Takshashila Institute.
'For now, the India-US relationship appears to be frozen and that is expected to deal a blow to collaborations such as the Quad. However, this situation also brings opportunities for middle powers, including in the Indo-Pacific, to come together. I have long believed that India, Japan, and Australia should have a much closer partnership,' says Unjhawala.
STORY CONTINUES BELOW THIS AD
As tariffs are just one way of needling India, Trump has strengthened the anti-India sentiment in the country and the government.
Beyond tariffs, Trump has interfered in Jammu and Kashmir, undermined India on Operation Sindoor, equated Pakistan to India, aligned with Pakistan, and partnered with Islamist regimes of Syria and Turkey. This has reignited Cold War-era fears that the United States essentially wants to check India's rise.
At least in the immediate future, there is merit in such fears.
Some of the most vulnerable sectors from Trump's tariffs in the immediate futures are some of the most labour-intensive and politically sensitive, such as the marine sector (shrimp, prawn, etc), textile sector, and edibles (fruits, pickle), according to Singh, the international trade and business professor at IIFT.
Any disruption in these sectors could have serious sociopolitical consequences.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
7 minutes ago
- Indian Express
Delhi underlines its message amid US tilt to Pakistan and 25% Russian penalty
Air Chief Marshal A P Singh's appraisal of India's air defence system during Operation Sindoor in May, emphasising the effectiveness of the Russian-supplied S-400 surface-to-air missile system, comes at a time when India-US ties are facing the biggest diplomatic test since Washington imposed sanctions on New Delhi in 1998 after the Pokhran-II nuclear tests. Amid the tension in ties with the US after President Donald Trump doubled the tariff on India over its purchase of Russian oil, it underlines the reliability of the India-Russia strategic partnership in times of adversity. The S-400 Triumf, (NATO calls it SA-21 Growler) — a mobile, surface-to-air missile system (SAM) designed by Russia — is seen as the most dangerous operationally deployed modern long-range SAM (MLR SAM) in the world, considered much ahead of US-developed Terminal High Altitude Area Defense system (THAAD). It can engage all types of aerial targets, including aircraft, unmanned aerial vehicles (UAV), and ballistic and cruise missiles within the range of 400 kilometres, at an altitude of up to 30 kilometres. The system can track 100 airborne targets and engage six of them simultaneously. It represents the fourth generation of long-range Russian SAMs — the successor to the S-200 and S-300. The S-400's mission set and capabilities are roughly comparable to the famed US Patriot system. The S-400 integrates a multifunction radar, autonomous detection and targeting systems, anti-aircraft missile systems, launchers, and command and control centre. It is capable of firing three types of missiles to create a layered defence. It is two-times more effective than previous Russian air defence systems and can be deployed within five minutes. It can also be integrated into the existing and future air defence units of the Indian Air Force, Army and the Navy. The first S-400 systems became operational in 2007 and is responsible for defending Moscow. It was deployed in Syria in 2015, to guard Russian and Syrian naval and air assets. Russia has also stationed S-400 units in Crimea to strengthen its position on the recently-annexed peninsula. While India's dependence on the Russian defence system, its supplies and spares is well known due to the legacy defence relationship since the Soviet Union era, S-400 has been the mainstay of India's defence system, although supplies have been stretched due to the war in Ukraine since February 2022. This puts Moscow as a reliable defence equipment supplier, at a time when geopolitics under Trump has brought in a sense of uncertainty and unpredictability in the defence partnership. In that context, India faces a diplomatic and strategic dilemma of Russia on one side, US on another side, and the China-Pakistan axis on a third side. It is important to note that the China-Pakistan axis is also facing different pressures – the China-Russia ties are strengthening, while the US-Pakistan bonhomie has just begun with Trump and Pakistan Army Chief Field Marshal Asim Munir warming up to each other. In this sort of multi-vector, multi-front challenge, Delhi views its ties with Moscow with much more predictability. This has been visible in the last few days, as Prime Minister Narendra Modi spoke to Russian President Vladimir Putin on Friday, a day after National Security Advisor Ajit Doval met the Russian President in the Kremlin. Despite the threat of sanctions on buying energy from Russia at discounted prices in the past three years, the Indian establishment has been relieved at Moscow's reliability when it comes to defence supplies – notwithstanding Beijing's influence, and at a time when India and China were facing off each other in eastern Ladakh with 50,000 to 60,000 troops on each sides. This had been assured by the Russian establishment in meetings with Defence Minister Rajnath Singh, and has continued over the last three years — with some delays. There have been questions over Russia's state of technology, because of the sanctions by US and European partners, but its diplomatic support for India has not diminished, according to Delhi. This has been a source of comfort, although India has been procuring and diversifying defence equipment from the American, French and Israelis among others. At a time when Prime Minister Narendra Modi is expected to travel to China for the Shanghai Cooperation Organisation summit in Tianjin on August 31-September 1 – which is likely to be a venue for his meetings with Putin and Chinese President Xi Jinping — the IAF Chief's comments are being viewed as a reminder of Russia's value. And, more deeply, a strategic signalling to the world – the US under Trump, China under Xi, Pakistan under Munir – that Russia's Putin, despite his chequered past, is a militarily-reliable partner for Delhi. Shubhajit Roy, Diplomatic Editor at The Indian Express, has been a journalist for more than 25 years now. Roy joined The Indian Express in October 2003 and has been reporting on foreign affairs for more than 17 years now. Based in Delhi, he has also led the National government and political bureau at The Indian Express in Delhi — a team of reporters who cover the national government and politics for the newspaper. He has got the Ramnath Goenka Journalism award for Excellence in Journalism '2016. He got this award for his coverage of the Holey Bakery attack in Dhaka and its aftermath. He also got the IIMCAA Award for the Journalist of the Year, 2022, (Jury's special mention) for his coverage of the fall of Kabul in August 2021 — he was one of the few Indian journalists in Kabul and the only mainstream newspaper to have covered the Taliban's capture of power in mid-August, 2021. ... Read More
Indian Express
7 minutes ago
- Indian Express
Knitwear to apparel, Tamil Nadu's textile belt starts feeling US's 50% tariff heat
IN TIRUPPUR, India's knitwear capital, exporters are already feeling the heat of the 50 per cent tariff US President Donald Trump announced Wednesday. They say orders are being paused, redirected, or lost entirely to competitors like Bangladesh, Pakistan, Vietnam, and Cambodia, all of whom lower US tariffs ranging between 19% and 36%. One Tiruppur exporter told The Indian Express that his regular US shipment had already been diverted to Pakistan. Another said his American buyer asked him to 'hold on' before confirming their summer order. A third revealed that buyers were previously demanding that exporters absorb the 25% tariff hike — a burden that has now doubled overnight. The revised duties, including baseline and remedy-linked tariffs, now push effective rates for some knitted garments to as high as 64%, rendering products up to 35% more expensive than those from regional competitors. What was initially seen as a major setback is now viewed by exporters as 'a de facto trade embargo'. The blow comes at a particularly cruel time when Tamil Nadu's textile belt was preparing for a rebound in US orders. Tiruppur, Coimbatore, and Karur collectively employ over 1.25 million workers and export Rs 45,000 crore worth of garments annually. Just weeks ago, optimism surged on the back of the India–UK Free Trade Agreement (FTA) and growing US interest in Indian goods due to elevated tariffs on China (125%-145%) and Myanmar (40%). Many exporters in Tamil Nadu had invested in new machinery to meet the expected surge. That hope is now turning into despair under the weight of retaliatory tariffs, especially with respect to China, which is now at 30% and could see a further downward revision once Beijing inks a deal with Washington DC. 'This is a setback,' said K M Subramanian, president of the Tiruppur Exporters' Association (TEA). 'Standalone exporting companies will be hit first. Buyers are already asking us to absorb part of the tariff. Our margins are just 5% to 7%; how can we share this cost?' Subramanian said while 30% of Tiruppur's exports go to the US, a diverse buyer base in Europe and the Middle East may provide some cushion – but not without pain. 'The non-branded buyers will shift immediately. Branded ones may stay because of the social compliance and operating protocols we offer, but we will still bleed for some time.' Textiles is a labour-intensive sector, and there are worries of job losses if the market shrinks. If exports contract 10-20% due to loss of orders, it can threaten 100,000–200,000 textile and garment jobs collectively in the three hubs — Tiruppur, Karur and Coimbatore — over the next few months. Tiruppur alone contributes Rs 40,000 crore to knitwear exports, supplying global giants like Walmart, GAP, and Costco, and accounting for 55% of the country's knitwear exports. The region had hoped to expand it by 10–15% in FY2025–26. Now, the outlook is grim, with analysts forecasting a 40–50% fall in US-bound orders, especially in cotton and knitted apparel segments. The fallout is not confined to garments alone. In Coimbatore and Karur, known for home textiles, order stagnation has already begun. K Selvaraju, secretary general of the Southern India Mills' Association, said buyers have started deferring or holding off on their summer bookings for bed linens and towels – key products traditionally finalised by October. 'We're hearing 'hold on' from clients who had placed advance enquiries,' Selvaraju said. 'If we miss this window, we miss the season.' Karur alone exports nearly Rs 9,000 crore in home textiles each year, with Rs 6,900 crore going as direct exports. Coimbatore mills send large volumes of cotton towels and kitchen linens to the US – now burdened with higher duties. 'This isn't just about one tariff hike – its compounding an already weak environment,' Selvaraju said, pointing to India's 11% import duty on cotton and a GST duty inversion that further hurts competitiveness. 'Polyester raw material is taxed at 18%, yarn at 12%, but finished garments are taxed at 5%. This adds 6-7% to export costs, while competitors don't have such inverted duties.' Meanwhile, the quality of cotton imports from Brazil, which make up 45% of this year's inbound shipments, is under scrutiny for not always meeting US-mandated standards. Selvaraju has urged the Centre to negotiate a cotton-forward deal, offering duty-free access to US cotton in exchange for apparel exports made from it. The global textiles market is highly competitive; India's key rivals face no such punitive hikes. Bangladesh continues with an effective rate of 35–36%, Pakistan has successfully negotiated a 19% tariff, Vietnam is at 20–21%, and Cambodia, though previously at 49%, now enjoys a 19% rate after an August 1 revision. By comparison, India's 50% penalty rate is not only isolated but unprecedented. One Tiruppur manufacturer admitted his shipment was lost to Pakistan. 'They seem to have offered a better price,' he said. 'The order slipped.' Subramanian reiterated that Bangladesh remains India's fiercest rival in the US market. 'Their 20% rate means they're much cheaper, significant when your margin is about 5%.' This margin has now all but vanished. With total duties touching 64%, non-branded US buyers are already shifting to cheaper options. 'They shift overnight,' Subramanian warned. Industry leaders are urging for immediate policy relief. 'The government had then provided an extended credit guarantee-linked scheme,' Selvaraju recalled, referring to pandemic-era support. 'It's time to bring that back.' He also pressed for eliminating the 11% cotton import duty and restructuring the GST regime on manmade fibres. 'For our exports to remain viable, tax on all raw materials must be below 5%.' If ignored, the consequences will be stark. Indian suppliers could lose permanent ground to Bangladesh, Cambodia as well as Vietnam and Pakistan – all of whom now enjoy cheaper landed prices in the US. The ripple effect – order shrinkage, idle capacity, and job losses – is already underway. 'The US market still wants to buy from us,' Selvaraju said. 'They like Indian cotton, the Indian make. But political and policy hurdles are pushing them away.' Ramdas, a mid-sized factory owner in Tiruppur, said the next two to three weeks will be decisive. 'We haven't seen cancellations yet, but the tone is changing. Everyone's cautious.' Yet, there is cautious hope. Subramanian believes this downturn could still be survived if India moves quickly. 'We got through Covid. We will get through this,' he said. 'We are talking to the Central government. We are urging negotiations with the US.' Some exporters also hope that pressure from big American brands – worried about higher retail prices – might eventually force a rethink in Washington.
Hindustan Times
7 minutes ago
- Hindustan Times
India plans tariff response to US over steel, aluminium levy
India may slap tariff countermeasures on select American commodities, a retaliation to Washington's move to impose a steep 50% duty in June on steel, aluminium and their derivatives from India, people aware of the matter have said. India plans tariff response to US over steel, aluminium levy To be sure, the levies on steel and aluminium have played out as a parallel trade dispute at the World Trade Organization, but its timing would make it the first Indian retaliation since Trump's July 31 announcement of the 25% tariff on all Indian goods entering the US when trade talks failed to reach a breakthrough and his subsequent penalties over Russian oil purchases announced on August 6. According to people aware of the matter, India has prepared legal grounds for the retaliatory action on steel and aluminium under World Trade Organization rules after the US rejected New Delhi's request for consultations over what India considers WTO-non-compliant safeguard measures disguised as national security actions. 'Washington is unwilling to address New Delhi's concerns through talks, which leaves India with little option other than to retaliate,' one person said. The steel and aluminium dispute dates back to February when the Trump administration imposed 25% tariffs on the metals, later doubling them to 50% in June. New Delhi intimated the WTO about the dispute and India's rights to take proportionate action on May 9 after at least $7.6 billion worth of Indian exports to the US were affected by the duties. 'The US is unjustly acting against India's economic interests even as the two countries are negotiating a bilateral trade agreement. India reserves the right to respond to unilateral and unreasonable actions of the US,' a second person said, adding that the beginning of the retaliation could be made with a 'proportional response to the US imposition of 50% tariff on Indian steel, aluminium and their derivatives'. America exports over $45 billion worth of merchandise to the Indian market, while India – prior to the Trump administration's wide variety of tariffs –exported $86 billion worth merchandise to US. How this balance changes is uncertain. Between February — when President Trump and Prime Minister Narendra Modi resolved to expand bilateral trade to $500 billion and launch comprehensive trade negotiations — and the last two weeks, when Trump announced Indian exports will be slapped with 50% levy from August 28, the journey has been turbulent. The trade talks stalled, primarily over US seeking unfettered market access to economically sensitive sectors that New Delhi steadfastly refused, before appearing to be beset by the controversy around Russian oil purchases. 'These unilateral, unjustified and unreasonable actions of the Trump administration raise doubt about its intent to have a fair, balanced and mutually beneficial bilateral trade agreement,' another person said. The escalating tariffs have effectively undermined bilateral trade negotiations, with India arguing that arm-twisting tactics make fair negotiations impossible. According to one of the people cited above, what has affected the retaliation calculus was Trump's comments on Thursday, when he rejected stepping up trade negotiations with India. 'No, not until we get it resolved,' the president said at the Oval Office when asked about increased trade talks. The broader trade relationship includes America's $13.62 billion in energy exports to India in 2024-25, plus significant trade in electronics, chemicals, and other goods, highlighting the scale of economic interdependence between the two countries. The US also maintains a services trade surplus with India of $102 million in 2024, with total bilateral services trade reaching $83.4 billion. US services exports to India totalled $41.8 billion, up 15.9% from 2023, while imports reached $41.6 billion, up 15.4%.
