Trump's divide & prosper mantra, and how India can strategise

Time of India

03-05-2025

Game On: US will be in a hurry to do deals before US consumers feel the pinch of tariffs
The assault on the
global trading regime
by US President Donald Trump, especially through the reciprocal tariffs announced on April 2, provides a fertile ground for examining negotiating strategies. It is common knowledge within the trade policy community that the US failed to secure most of its negotiating objectives in the Doha Round of multilateral trade negotiations at the WTO, which commenced in 2001. On many issues of its interest, it was repeatedly checkmated by multiple coalitions of developing countries.
The reciprocal tariffs were, thus, a bid to compel recalcitrant countries, such as India, Indonesia, Brazil, South Africa etc. to come to the negotiating table. With most countries keen on preserving their export prospects in the US market, they are likely to be agreeable to the US demands, many of which they had previously resisted at the WTO. Further, by shifting the negotiations from the WTO to a bilateral forum, Trump has reduced the possibility of developing countries banding into coalitions to oppose the reciprocal tariffs. Divide and prosper is the mantra for success behind forum shifting.
In an attempt at diminishing the economic prospects of China, against which the big stick may not be effective, Trump is resorting to brinkmanship. With China not showing any sign of backing off, Trump's strategy is likely to centre around finding a face-saving solution. Else his credibility could take a hit, which might even encourage some of the larger developing countries to think twice before offering concessions to the US in their bilateral negotiations.
It is relevant to note that by focusing on high tariffs of India and many other developing countries, Trump appears to have won the battle of perception. No doubt, the tariffs of the US are substantially lower than those prevailing in many countries. However, this is directly related to the outcome of the Uruguay Round of
GATT negotiations
, which entitled many developing countries to maintain high tariffs. The success of issue framing can be gauged from the reality that most commentators do not even make a passing reference to Trump's tariffs being illegal, even though they breach multiple commitments of the US at the WTO.
Where does India find itself in this web of negotiating strategies? Trump has said that America's tariff negotiations with India are 'coming along great,' and a trade deal with New Delhi may happen soon. But even before the US imposed reciprocal tariffs, the two countries had decided to initiate negotiations for a bilateral trade agreement. India is likely to use this opportunity to seek reduction in tariffs imposed on it and perhaps also for securing new market access in labour-intensive products. Given the asymmetry in the economic and political clout between India and the US, India may be compelled to bargain on terms set by the US. However, there could be a deadlock at the negotiating table if the US insists on extracting concessions from India in sensitive areas such as govt procurement, agriculture and intellectual property rights. What strategy should India adopt for grappling with such an eventuality?
While India engages in bilateral negotiation with the US, it must not forego the possibility of collectively working with other countries for protecting and promoting its trade interest vis-a-vis the US. India must also work towards preventing a power-based regime from replacing the rules-based trade order. This would strengthen its hands in bilateral negotiations and also increase its options.
Overall, multiple negotiating strategies appear to be at play behind the US tariffs. While Trump seeks to leverage his country's asymmetric power at the negotiating table, whether the strategies will succeed is likely to depend on how his administration exploits two other ingredients for negotiating success — information and time. By negotiating separately and simultaneously with many countries, the US has positioned itself to have complete information about the concessions being put on the table by various countries. Most countries are likely to be unaware of what concessions others are offering to the US. The US is likely to exploit this situation of significant information asymmetry for extracting maximum concession from others, while conceding little ground itself.
Further, from the perspective of US strategy, it is essential that countries are rushed into concluding the bilateral negotiations before US consumers start feeling the pain of empty retail shelves. Time may also be of essence in containing further uncertainty in financial markets. This might explain the rationale for the US seeking to conclude many bilateral negotiations within the 90-day period. The coming few months are likely to provide a fascinating glimpse of whether the strategies being deployed by the US help it in securing what it aspired for during the Doha Round and maybe much more.
The author is an international trade expert and author of the recently published book 'Strategies in GATT and
WTO Negotiations
'. Views are personal.