COMMENTARY:
With a GDP measured at $3.9 trillion dollars, India is one of the world’s premier emerging economies. Over the past few decades, it has carved out a niche as a major IT center in terms of software development, backroom operations, and digital technologies. Within the past decade, India has focused on developing its manufacturing sector, both for domestic purposes, and for exports to the world. Its population of nearly 1.5 billion, almost five times that of the U.S., makes it an attractive market for foreign companies wanting to tap into this huge market.
Since its independence from Great Britain in 1947, India has had a cordial relationship with the U.S., which has viewed India as a key diplomatic partner in Asia. However, in the past couple of months, India’s relationship with the U.S. has taken a severe nose dive. President Trump has imposed up to 50 percent import tariffs on many of India’s goods, because he claims that India continues to buy Russian petroleum, despite Russia’s invasion of Ukraine. Angered, and probably more insulted, India has stated that despite the tariffs on its exports to the U.S., it will continue to buy Russian petroleum.
On September 1, Indian Prime Minister Narendra Modi met in Tianjin, China, with Chinese leader Xi Jinping and Russian President Vladimir Putin at a regional summit held by the Shanghai Cooperation Organization. Both Xi and Putin rolled out the red carpet for Modi, obviously trying to court him to their side and away from the previously cozy relationship with the U.S. Modi was afforded special status when he was given a ride in Putin’s personal armored car. During the visit, Putin referred to Modi as “a dear friend,” and Modi stated to Putin that “I always feel that meeting you has been a memorable experience.” Modi also commented positively on the meetings with Xi, and India’s relationship with China.
On the day of Modi’s visit to Tianjin, President Trump further fueled the fires with India by stating that the relationship the U.S. has had with India is a “one-sided disaster,” indicating that he believes India has been taking advantage of the U.S. in trade matters. He brought up the fact that India continues to buy Russian petroleum and very little from the U.S. Trump also stated that it is getting to be late in the game for India to strike a tariff deal with the U.S.
Modi’s friendly visit with Xi and Putin bodes badly for the U.S. We can’t afford to lose India as a strategic trade and diplomatic partner at this time in history, in which Russia bares its aggression to the world and China tries to spread influence across the globe. While this is happening, the U.S. is reining in its influence by mothballing major efforts such as USAID.
What is so striking about India’s sudden embrace of China and Russia is that during President Trump’s first term, he and Modi had an extremely close relationship – this in spite of the fact that many people called on Trump to chastise Modi for suppression of the press and human rights violations. Trump refused to do so and invited him to an official visit to Washington, D.C., in 2017.
The tariffs have played a major role in pushing India to China and Russia; however, there might be a more personal issue between Trump and Modi. Various media outlets, including the New York Times, reported that on June 17, Trump and Modi had a phone call that ended badly. In May, four days of fighting broke out between India and Pakistan, as has frequently been the case since Pakistan separated from India in 1947. Purportedly, on the phone call Trump claimed that he had brokered the cease-fire ending the conflict. Modi told him that Trump had not been involved, and that India and Pakistan settled the conflict by themselves. Pakistan, a long-time nemesis of India, claimed that Trump had been involved, and that it was going to nominate him for a Nobel Peace Prize.
Both Trump’s and Pakistan’s claims put Modi in a tight spot politically in his country. However, refusing to back down from claims, Modi stood firm in his stance on the cease-fire and the phone call ended on a sour note. Almost immediately after the call, Trump began publicly insulting India, and embarrassing Modi on the international stage. Very shortly afterwards, Trump imposed the 50 percent tariffs on Indian imports to the U.S.
The phone call, with the accompanying tariffs, have soured U.S.-India relations arguably to the worst point since India’s independence. India’s economy could take a hit because of the tariffs imposed on its products. The U.S. stands to lose an important trade and critical ally in Asia. Perhaps more important, the world could come to the conclusion that allies of the U.S. could see their decades-long, favorable relationship with the U.S. come to an end with a simple phone call and personal egos involved. Let’s hope that both countries come to the conclusion that having a strong relationship is good for each of them.
Jerry Pacheco is the president of the Border Industrial Association. Jerry Pacheco's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.