Modi visits America
Nk Tripathi
The dust blown by the excitement over Modi’s visit to Donald Trump’s America has settled down. Trump made it abundantly clear that in his second term he still considers India strategically important, ‘but for a cost’. His major plank during election campaign,MAGA was centred around the economic gain to America especially by trade. He is threatening the world with a whip of punitive and reciprocal tariffs. Trump wants to reduce American imports to give protection to his industry for creating more jobs. He has already subdued Canada and Mexico and many in Latin America and to some extent, China.
There is no denying that since the World War II, the US had very low tariff wall and allowed the developing world to have higher tariff rates. This was a considered altruistic stance of the US to allow the developing countries to grow their economies. The present concessional tariff system of the US for the emerging world is incorporated in WTO. Trump says no more to this policy. America’s low tariffs allow the world to sell their goods to America with ease. This situation of surplus import by America has resulted in huge deficit in trade for the country. The deficit with India had been in the range of $40 billion. America now insists that India buys more from America to bridge this gap. America has proposed India to buy more defence equipments from America. At present India’s import of defence equipments from America is barely 13% of its total defence import.
During the visit Trump extended all usual courtesies to Modi. He gave several warm hugging photo ops so that Indian TV channels can show it to Indian spectators. He praised Modi as a very tough negotiator. He presented a coffee table book and autographed and mentioned Modi ‘You are great’. However, Trump’s declaration of reciprocal tariffs with different countries just before the visit of Modi was a pointer for the coming moves of Trump. During the joint press conference, Trump did not mince words to raise the issue of high tariffs of India. Modi maintained his stoic posture and somewhat courageously talked about his Make India Great Again. Modi said that MIGA is as important for him as MAGA for Trump.
To be fair to Trump, he reiterated the American stand on strategic partnership with India. He agreed to gradually transfer the defence technology and acknowledged India’s role in Indo-Pacific. He recognised India as a regional power by saying that Bangladesh issue is to be dealt by India. He categorically denounced Pakistan for its cross-border terrorism. He openly referred to Islamic terrorism, something which India refrains to say. US is also ready to help India in nuclear energy. However, Modi accepted to take back illegal Indian migrants living in America. Trump is also likely to reduce the numbers of H1B visas.
Trump’s assertion of reciprocal tariffs on India is also meant as a bargaining point for a favourable trade deal. Indian officials have already started drawing the contours of the proposed bilateral trade agreement with the US. The work is been done at a fast speed and it should be ready within in a few weeks. The government does not intend to have a free trade agreement (FTA) with US, but only a trade deal. America is intending its proposed reciprocal tariff system with legislation by the Congress.
Trump will probably emerge as one of the most powerful presidents of the US. His party controls both the houses of the Congress. Trump’s appointees are in majority in Supreme Court. He intends to use all possible powers within his country. He has shaken the world trade which may result in the retardation of economies of many countries, probably including US. Modi has to display astute diplomacy to protect the Indian interests as best as possible.
