U.S. President-elect Donald Trump is living up to his self-styled title of “tariff man,” this time targeting some of the world’s fastest-growing major economies just weeks ahead of his inauguration.
Earlier this month, Trump set his sights on the BRICS nations, threatening to impose 100% tariffs if they move to establish a new currency or replace the U.S. dollar in international trade.
India, a founding member of BRICS and a key player in the organization alongside China and Russia, finds itself in the crosshairs. During a campaign event in September, Trump referred to New Delhi as a “very big abuser” in the bilateral trade relationship, signaling potential challenges ahead for U.S.-India ties.
During his first term, Donald Trump imposed tariffs on steel and aluminum, triggering a series of retaliatory measures. He also revoked India’s preferential trade status, removing exemptions on billions of dollars’ worth of Indian exports to the U.S., a move that frustrated Indian officials.
Despite these challenges, Trump shares a warm personal rapport with Indian Prime Minister Narendra Modi. Their mutual admiration was on full display four years ago during Trump’s visit to Modi’s home state of Gujarat. Analysts believe this relationship could benefit India during Trump’s second term.
In contrast to other founding BRICS members—Russia, China, and Brazil, often characterized by anti-American sentiment—India stands out as an ally of the United States, according to Harsh Pant, vice president of the Observer Research Foundation in New Delhi. This alignment positions India advantageously within the bloc, especially given its influence in countering discussions around de-dollarization.
The push for de-dollarization, a long-held aspiration for some BRICS members, seeks to reduce reliance on the U.S. dollar by creating a new currency or adopting alternative tenders. While this shift could diminish U.S. financial influence, Pant notes that India’s position as a U.S.-friendly member allows it to caution the group against antagonizing Washington.
“Trump’s firm stance against de-dollarization provides India with room to maneuver,” Pant said, emphasizing that India can advocate for caution within BRICS to avoid provoking a highly reactive United States.
Supporting this sentiment, Indian Foreign Minister Subrahmanyam Jaishankar recently clarified that India has no interest in undermining the U.S. dollar.
Quite positive
Pro-Washington sentiment remains strong in New Delhi, with China and the perception of an inevitable U.S.-China rivalry driving closer ties between Washington and India, some observers suggest.
“Trump’s first term was quite positive for India. His relationship with Modi worked well, creating a sense that his second term might bring more continuity and less disruption,” said Harsh Pant of the Observer Research Foundation.
The personal bond between Modi and Trump flourished during Trump’s first term. Modi received a hero’s welcome at the 2019 “Howdy Modi” rally in Texas, while Trump enjoyed a grand reception at the 2020 “Namaste Trump” event in Ahmedabad, attended by 125,000 people.
Michael Kugelman of the Wilson Center’s South Asia Institute sees a potential for improved U.S.-India relations under a Trump administration compared to the Biden years, particularly on contentious issues like Ukraine and human rights.
“Trump and Modi’s worldviews align more closely than those of Biden or Obama with Modi,” Kugelman said.
On Ukraine, both leaders have refrained from directly criticizing Russian President Vladimir Putin for the 2022 invasion. Instead, they’ve called for peace, with Trump claiming he could end the war in 24 hours and Modi offering to mediate during a visit to Moscow in July.
Ways of Transctions
India is unlikely to escape the occasional turbulence that comes with a Trump administration.
Michael Kugelman of the Wilson Center notes that Trump’s proposed universal 10% tariff could impact India significantly, given its trade surplus with the U.S. According to U.S. data, bilateral trade has heavily favored India in recent years. Over the past two years, the U.S. has imported roughly twice as much from India as it has exported.
India’s growing importance as a manufacturing hub for companies like Apple, especially as global supply chains pivot away from China, further underscores the significance of this trade relationship. Between January and October of this year, the U.S. imported $73 billion worth of goods from India, compared to $35 billion in exports.
Kugelman and Harsh Pant agree that while the trade imbalance poses challenges for New Delhi, they are manageable. However, it could lead to a more transactional dynamic in negotiations.
“This is simply Trump’s style—strategic partners like New Delhi will have to adapt,” Kugelman said.
Pant echoed this sentiment, describing Trump as “a deal maker” who prioritizes immediate exchanges over long-term planning. “It’s all about give and take. The focus shifts from a five-year strategy to striking the best deal right now,” he explained.
Harsh Pant highlights a 2018 waiver granted to New Delhi by Washington for its involvement in Iran’s Chabahar Port. This exemption became essential after the U.S. reimposed sanctions on Iran, restricting American and foreign entities from conducting business with the country.
India had previously signed a 10-year, $500 million agreement with Tehran to develop and operate the port, which New Delhi views as a critical trade corridor to Central Asia and Afghanistan, circumventing its regional rival, Pakistan.
The waiver aligned with Donald Trump’s South Asia policy at the time. In a 2017 speech, Trump urged India to provide greater economic support to Afghanistan, using the robust trade ties between the U.S. and India as leverage in negotiations.
“If you can clearly present your interests and approach Trump with a business-oriented mindset, you might avoid adverse outcomes,” Pant noted.
India has shown an ability to balance its relationship with Trump while safeguarding its own strategic priorities. Whether this balancing act can be successfully replicated remains to be seen, but optimism seems to prevail in New Delhi.
