Transcription
The US has imposed a punitive 25% tariff on India. President Trump warns more could follow. It's a spectacular change from 6 months ago when the leaders of the two nations declared their friendship at the White House. So, what went wrong and what next? This is Inside Story.
Hello and welcome to the program. I'm Darin Abbuga.
"A great friend," said US President Donald Trump of India's Prime Minister Narendra Modi back in February. Modi was one of the first international leaders to visit him at the White House, just weeks into his second term. But six months on, their strong bond appears to have ruptured. Trump is imposing 25% tariffs on goods imported from India. And describing the Indian economy as "dead," he says more harsh measures could be on the way because India buys oil from Russia. But unlike most other world leaders targeted in Trump's sweeping tariffs, Modi is standing firm. Indian officials say they'll continue to purchase Russian energy despite Trump's threats. So why have relations between the one-time close allies nosedived so quickly? What are the consequences? And can the rift be healed? We'll get to our guests in a moment. First, this report from Katya Lopez Huran.
"The great Indo-American friendship." It was a friendship that once had the promise of a strong political alliance. US President Donald Trump and Indian Prime Minister Narendra Modi, both known as populist leaders. But now there's a shift in tone, with Trump and his administration accusing India of financing Russia's war in Ukraine.
"It is not acceptable for India to continue financing this war by purchasing the oil from Russia. People will be shocked to learn that India is basically tied with China in purchasing Russian oil. That's an astonishing fact."
India purchases about a third of its oil from Russia. Government leaders say they will continue to do so despite threats of additional penalties from the US, and that's on top of Trump's 25% tariffs on Indian exports.
"India is a major, major source of, um, generic drugs, especially for the United States. And so, in addition to the 25% tariff, there are also rumors of an additional tariff on pharmaceuticals."
Now, many in India are questioning if Modi miscalculated his ties and friendship with Trump.
"It's a huge political setback for him. And he called Mr. Trump, 'my friend,' you know, the very close friends. And even Mr. Trump says, 'my good friend, Mr. Modi.' So this is what one friend has done to the other friend."
"We missed you. We missed you a lot."
A geopolitical fallout is at risk. Trump's policies, critics say, could push New Delhi closer to Moscow and Beijing. Each, along with Brazil, are founding members of the BRICS group of nations.
"You know, they have BRICS, which is basically a group of countries that are anti- the United States. And India is a member of that, if you can believe it. It's an attack on the dollar, and we're not going to let anybody attack the dollar."
Modi has remained defiant, though not mentioning him by name. He dismissed Trump's claims that he managed to broker a ceasefire deal between India and Pakistan in May.
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"No world leader asked us to stop the operation."
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"It was Pakistan that pleaded over a call with India's director general of military operations to stop fighting after feeling the heat of our attacks."
Washington's tariffs on India mark a new chapter in their trade relationship, with many waiting to see the impact it will have politically and economically for both countries. Katia Lopean, Al Jazeera for Inside Story.
Let's now bring in our guests. Joining us from New Delhi, we have Brahma Chilani, who's a professor of strategic studies at the Center for Policy Research. He's also a former adviser to India's National Security Council. Joining us in Washington DC is Elizabeth Thrall, a senior fellow and director of the South Asia program at the Stimson Center. And in Kolkata, Sumantra Bose, political scientist and professor of international and comparative politics at Korea University in India. Thanks for your time. Welcome to you all, uh, to Inside Story.
Elizabeth, I'll start with you. Some in the Indian media are reporting this: Trump's move is less about trade policy and more about leverage. It's a pressure tactic. Is that how you view what's happening right now? And what do you think Trump is hoping to achieve with the 25% tariff?
You know, I think it's important to zoom out and see this in the broader context. Obviously, uh, if you're sitting in Delhi, then that is the main story, uh, of this tariff push, but obviously this is something that is impacting countries around the world. Uh, we've seen a few deals that have come out in recent weeks, but this is something that is impacting a broad swath of countries. And I would actually read it more in terms of how, uh, the Trump administration is seeking to rebalance their priorities under this administration. So far, we've seen a greater focus on domestic politics, on trade as a way of, uh, beefing up US economic security. And I think that is a new push and a new angle to a US-India relationship that here before has been dominated more by, uh, aligned security concerns. You know, whether this is a tactic, whether this is a broader strategy, I think time will tell. Uh, but so far, you know, this is not a, I'm not seeing signals from the White House, from the administration, that they are looking to back down. In fact, the, the rhetoric seems to be escalating, as you played that tape from, uh, Steven Miller, for example, over the weekend. So, I think we're in for a continued rough patch, at least, uh, for the weeks and perhaps months to come.
So, Sumantra, how big a deal is this in India, and how damaging are these tariffs likely to be?
Uh, well, in India, uh, this tiff is probably going to be largely seen as a question of national pride and the national interest. Uh, a couple of days ago, uh, Prime Minister Modi, who often maintains, uh, strategic silence on various matters, spoke up on the tiff, and he said that his top priority as prime minister is to protect the interests of Indians, specifically Indian farmers, Indian small businesses and entrepreneurs, and, uh, the huge youth bulge, among whom there is a massive unemployment problem. Uh, I should mention that, uh, long predating Trump, the United States has put pressure on India to open up its, uh, farm and dairy sectors, and also its retail sector, and it hasn't happened to the extent that the United States would have liked. So this point of friction or tension, in fact, predates the Trump administration. The big difference is that no previous US president or administration has done it in such a blunt and, uh, uncivil way as, uh, this one. I fear it's going to get the backs of a lot of Indians up and enable Modi to play to the domestic gallery to pose as the champion of India, and specifically the champion of Indian farmers. Most Indians are still engaged in agriculture, and, uh, the little man, the small shopkeepers, traders, and so on. So it's a big deal.
Mmm-hmm. Okay. You raised some interesting points. I'll be coming back to some of them, but Brahma, over to you. How do you think India will be able to balance this, right? The need to stand firm against US pressure, but at the same time, it may risk losing a key export market?
The striking irony over the US-India tensions is that Modi has come to be seen as India's most pro-US prime minister ever. While clinging to the country's traditionally independent approach to international affairs, Modi's foreign policy has betrayed a not-so-subtle pro-Western tilt. So it's very ironic that on his watch, there are these new tensions with Washington. In fact, the new strengths and ties with Washington are reinforcing India's imperative for better balance and greater maneuverability in foreign policy as a hedge against American unpredictability. This may well explain recent efforts by India to ease its Himalayan military tensions with China. Modi is scheduled to visit China this month-end for talks with Xi Jinping on the sidelines of a summit of the Shanghai Cooperation Organization. So, by impelling India to seek a thaw with Beijing as a hedge against American unpredictability, Washington is compounding its blunder in helping to drive Russia and China closer together in an unholy alliance. But I think Trump's personal rapport with Modi offers some hope that the US and India may be able to overcome their current disputes and differences to revitalize ties.
Trump, as we all know, has a reputation of being a shrewd businessman who seeks to drive a hard bargain. He has weaponized tariffs to advance not just US economic interests, but also geopolitical objectives. And this is very clear.
But hang on a second, Brahma. Look, speaking of personal rapport, you bring it up, right? Speaking of personal rapport, what about Modi? Did he overinvest in, in one man, that is Trump, rather than the broader US relationship?
I think personal chemistry between, um, world leaders is very important in, uh, in promoting inter-country relations. So I think the Trump-Modi connection was, was very helpful. For example, in, in Trump's first term, US-India relations thrived. They thrived in large part because of the Trump-Modi connection. This time, Trump has returned to the White House with a different agenda and different mindset. He, you know, for first, we are seeing this return of the "with us or against us" approach in US foreign policy. And we should not forget that the Trump administration is targeting not just India. It's targeting other independent powers and leading democracies of the Global South, including Brazil and South Africa. So Brazil, India, and South Africa, all members of BRICS, are among the prime targets of the Trump administration. The irony is that Brazil, India, and South Africa are the three powers in BRICS that are ensuring that BRICS does not develop an anti-Western orientation. So Trump's heavy-handed attempts to pressure these countries are destined to fail because each of them, we have seen how Brazil has stood up to Washington, South Africa too has stood up to Washington, and India will not wilt under Washington's coercion. And I think those in, in, in the Trump administration who believe that they can pressure India into doing things that India has always been opposed to, they, they are mistaken. In fact, it will only harden India's position.
Elizabeth, does this hurt Trump politically within the US? The fact that he seems to be alienating India, which has been a key strategic partner, is this seen as a risky move amongst some in Washington?
Uh, I think certainly those of us who pay attention to, uh, the US security landscape, uh, and broader geopolitics are watching this with a mix of, of interest and concern. But actually, in a bit of a mirror to the dynamics that were described on the Indian side in terms of domestic politics, right? This is very much the Trump administration seeking to demonstrate how Trump himself and Washington are working for the interests of the American people. Uh, and the narrative that is, I think, playing fairly effectively with Trump's base in particular, is that, uh, the US has been taken advantage of by free riders in the international system, and that Trump needs to leverage his ability to make deals and to push a hard bargain, uh, in order to get a better deal for the American people. Of course, the actual impact of tariffs and the extent to which they will operate as taxes that are passed on to the American consumer complicates that narrative, right? But in terms of the story that Trump is able to tell, I think it is a very much in line with his populist image here at home. And so putting those two together, we have two populist leaders who, for this point at least, are leaning into their credentials and to defending the interests of their people as they see it.
So Sumantra, from a Delhi standpoint, is Trump still seen as a viable long-term partner, or is India recalibrating its strategy? Is it going to push India further towards Russia and China, as, as Brahma seemed to suggest earlier on?
Uh, well, no Indian government can afford to alienate the United States, which is, after all, for better or for worse, the single most important and powerful country in the world. But I should point out that the improved United States-India relationship is of fairly recent origin. It's a development of this century, and probably the initial turning point was a state visit by then President Bill Clinton to India in March of 2000. In fact, India's, uh, all-weather ally, more or less, has always been Russia, or rather the Soviet Union. India pursued a foreign policy based on a strategic doctrine called non-alignment from the 1960s through the end of the 1980s, beginning of the 1990s, and this involved, um, trying to be a leader of the Third World, as the Global South was known then, and avoiding getting overly aligned with or tied to either of the superpower blocs. Of course, in the '70s and '80s, India was strongly tilted towards the Soviet Union, but non-alignment still remained the cornerstone of its, uh, the declaratory cornerstone of its foreign policy. Now, since the early to mid-1990s, the old term non-alignment, which did not make a great deal of sense probably back then, and certainly not since the end of the bipolar world, has been replaced by another term called strategic autonomy. And that commitment to strategic autonomy in foreign policy has really not changed that much, not drastically or very significantly, under the Modi premiership of the last 11 years. So, in answer to your question, uh, India has always hedged its bets and tried to spread its risks. In the 4-day war in May with, uh, Pakistan, uh, Sukhoi and Rafale jets were used. The BrahMos supersonic missile was apparently used, and that is a Russian-Indian collaboration.
Right?
And, uh, the S-400 Russian, uh, uh, system, the air defense system, played a critical defensive part in, uh, Indian strategy. And if you look at India's oil imports, uh, at the moment, uh, the top five suppliers are, in this order: Russia, Iraq, um, Saudi Arabia, the United States, and Iran. So this is nothing new for India to try and have a balanced foreign policy.
Okay, hang on a second. Hang on a second. Okay, on that point you make about Russian oil, Brahma, I'll ask you. So Trump, as we heard, is demanding that India stop buying Russian oil, something that India has said that it will not do. Is India's stance on Russian oil right now transactional, or does it indicate a deeper alignment with Russia?
Trump's focus on Russian oil reflects both his frustration with Putin for not accepting a ceasefire at a time when the West is staring at a possible defeat in the Ukraine war. That's the reason why Trump has stepped up pressure on India and China. China has already rebuffed Trump's pressure. But Trump's second motive is to use Indian purchases of Russian oil as a negotiating tactic. He wants India to ditch Russian oil in favor of more American oil. In his first term, Trump, by imposing sanctions on Iran, deprived India of cheaper Iranian oil, thereby turning India into a major and growing market for US crude and LNG exports. Since 2019, since he imposed sanctions on Iran, American crude and LNG exports have risen quite dramatically. Now, in his second term, by exerting pressure on New Delhi to stop buying Russian oil, Trump would like India to actually become the largest buyer of US energy products. But there is an important difference. Unlike Iranian oil, Russian oil is not subject to direct US sanctions. That difference is the reason why New Delhi is less willing to yield this time. Even so, India is seeking to placate Trump by significantly increasing imports of higher-priced American crude. According to one report, Indian imports of US oil are likely to go up by 150% in the current fiscal year. So, India is—
And who is reporting this? And, and who is reporting this, if I may ask you?
This is according to, you know, Indian officials reported in today's newspapers.
Okay.
That, um, that in the, in the, in the first six months of this year, since Trump took office, Indian imports of American oil have risen by more than 50%, according to these news reports, and that in the full year, they're going to go up by 150%. So India is ramping up, uh, in a very significant manner, imports of Russian, sorry, imports of American oil and LNG.
Okay.
So India is trying to do both things: stick to its, um, traditional partner Russia while also trying to placate Washington.
Okay. Um, look, we were mentioning the Ukraine war just a moment ago, Elizabeth. So it seems like there are a number of differences on the political front, right? There's the Ukraine war, then the most recent being, of course, that India-Pakistan ceasefire, with Trump claiming multiple times that India and Pakistan had agreed to a ceasefire thanks to US mediation. We know that Indian officials, including Modi, have come out and said, no, that's absolutely not correct. To what extent has that been a contributing factor to the recent deterioration of the relationship?
You know, I think this is a significant factor in some ways because the India-Pakistan relationship, uh, is so politically sensitive within, uh, New Delhi, especially among Modi's political base. And to have the Trump, you know, multiple times, not just on one occasion but over 25 at this point, uh, to have President Trump come out and say publicly that he played a key, decisive role in bringing about a ceasefire, that every time it happens is like a pinprick in both the US-India relationship, but also in continuing to push this narrative. And so I think we're in this an interesting moment right now where the Trump administration truly seems to be pursuing a de-hyphenated relationship between India and Pakistan in some ways. Right? We're talking more about trade with India, uh, some continued defense cooperation, which we should still get to, right? That is also a pillar of this relationship, but things are moving forward with Pakistan in a way that truly we haven't seen. And I think many in India will have become more accustomed to the approach that the Biden administration took, for example, where there was a very, very low level of US-Pakistan ties, particularly in the aftermath of the, uh, US withdrawal from Afghanistan. And so as we're seeing that US-Pakistan relationship, uh, really get wind in its sails at a time when the US-India partnership, uh, is on rockier ground, it is particularly challenging from the perspective of policymakers in New Delhi, uh, when it, it just seems as if, uh, the US and Washington are kind of finding a, a variety of different ways to complicate things, especially politically on the domestic political front for, uh, Prime Minister Modi, since this has gained traction, uh, among opposition parties in, in India.
So Sumantra, is there a path back to cooperation, or do you think this relationship has fundamentally shifted?
I don't think the relationship has fundamentally shifted. Uh, you know, first of all, uh, Trump is so unpredictable and erratic. What he says today, he may be saying the opposite thing or something close to the opposite thing tomorrow. What he wants today, uh, may not be, uh, what he wants tomorrow. I think there is more to his, uh, uh, bullying posturing than meets the eye. Uh, he clearly wants India to buy more American oil and more American weapon systems, which he keeps boasting are the best in the world and so on. Um, at the same time, I think Modi has limited room for maneuver, because he has, you know, cooed up to Trump, uh, in, in the past, as has already been mentioned. I think Trump is irritated with India and also with Modi personally. Um, most recently, because the Indians have been refusing to give him credit for bringing about the cessation of the India-Pakistan armed conflict that he believes to be, uh, his. But also, uh, last year, uh, when Modi was visiting the United States, he was supposed to call on Trump when Trump was running for his second term, and he ultimately did not do so. And, uh, Trump, as we all know, operates a lot on the basis of personal grudges and grievances. But Modi is in a tight spot because, um, he cannot be seen to be caving in and capitulating to American, uh, bullying and this boorish behavior of, of Trump. On the other hand, he probably knows that he will have to make some concessions if this tiff is going to be sorted out to mutual satisfaction.
Do you agree? Is Modi in a tight spot? I mean, who, who loses more from this rupture? Is it Trump, who may damage US interests in Asia? Is it Modi, who, who perhaps looks, um, like he's being sidelined? And, and do organizations like BRICS come out on top, the ones that challenge US global dominance?
India is the only Asian economy that trades more with the US than with China. And the US-India partnership is pivotal to maintaining the balance of power in the Indo-Pacific. If the US wishes to generally pivot to Asia, which has been the American goal since 2011, but the US has never generally pivoted to Asia. But if it wants to pivot to Asia, it must improve relations with India. It has no other choice. In fact, if the US wishes to prevail in its escalating rivalry with China, it needs India more than ever. But without mutual respect, this bilateral relationship is doomed. So the issue is about mutual respect and mutual trust. We were talking about Trump's claim to have brokered a ceasefire between India and Pakistan. But we are overlooking one key element in the new US-Pakistan love affair, which is Pakistan's major investment in the Trump family-controlled World Liberty Financial, a crypto firm. In April, Pakistan made a major investment in World Liberty Financial, and suddenly since then, there has been a sea change in Trump's attitude towards Pakistan. Clearly, there is a personal gain element involved. The crypto business of the Trump family is clearly influencing American foreign policy, and that's an unfortunate element which we should not ignore.
Okay, we will have to leave it there. On that note, thank you so much to all my guests for joining us. Brahma Chalani, thank you. Elizabeth Thrall and Sumantra Bose, we appreciate your time. Thank you for watching. You can see the program again anytime by visiting our website, aljazeera.com. For further discussion, go to our Facebook page. That's facebook.com/ajinsightstory. You can join the conversation on X. Our handle is @AJInsightstory. From myself and the whole team here in Doha, thanks for watching and bye-bye for now.
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