India To Put Retaliatory Tariffs on US Goods as Modi’s “America First” Policy Backfires On His Sinophobic Government

India has written to the World Trade Organisation (WTO) declaring its intention to put tariffs on a variety of American products that are traditionally popular in the south Asian country. The move comes after the Trump administration failed to grant India an exemption to the new US tariffs on imported steel and aluminium. While India is not  in the top ten steel importing nations in respect of the US market, New Delhi nevertheless felt the need to follow China’s lead and impose retaliatory tariffs on a protectionist US.

According to the Indian statement delivered to the WTO,

“The proposed suspension of concessions or other obligations takes the form of an increase in tariffs on selected products originating in the United States, based on the measures of the United States. India wishes to clarify that suspension of concessions shall be equivalent to the amount of trade affected by the United States’ measures. India reserves its right to further suspend substantially equivalent concessions and other obligations based on the trade impact resulting from the application of the measures of the United States”.

There is nothing particularly unique in India’s retaliatory approach to the American barrage of tariffs on both economic rivals and traditional allies. However, India’s position as a country that intentionally acted in an obstructionist manner to all the leading pan-Asian economic integration and inter-connectivity initiatives, does make India an important case study regarding how the Chinese model that India detests is the only viable option for Asian countries that seek to improve the material well being of their societies.

 

 

When Chinese President Xi Jinping met Indian Premier Narendra Modi in April of this year in an attempt to reduce tensions between the large neighbouring states, I described Donald Trump and his tariff campaign as being the silent elephant in the room, looming over discussions between the President who spearheaded the One Belt–One Road trade and inter-connectivity initiative and the Indian Premier who has gone out of his way to heap scorn upon China’s global initiative:

“While China has consistently called on India to embrace the spirit of anti-colonial liberation and join with fellow Asian nations by adopting a win-win  mindset, when it comes to cooperative connectivity initiatives, border disputes and bilateral trade, the Modi government has consistently favoured hostility over holism and confrontation over cooperation.

For many nations, the hostility India has shown China would have already crossed a red-line, but instead, China retains a policy of keeping all doors open for reconciliation with India. For Modi’s part however, things are not so simple. Not only has Modi’s BJP government gone out of its way to provoke disagreements with China across a variety of fronts, but perhaps more importantly, the BJP has engineered, fostered and kindled a Sinophobic attitude in India that now permeates almost all echelons of society. According to the BJP mindset, China is not just a country with which India has disagreements – according to the BJP narrative, China represents a kind of zero sum threat to the cohesion of India, even when the BJP government itself has done more to destroy social cohesion in India than any prior government and has done more to isolate itself from China than China could have ever hoped to do, even if Beijing were to adopt New Delhi’s hostility”.

 

I further wrote that given the fact that US tariffs would hit America’s new friend India even harder than rival China, New Delhi needed to examine its future options in the following way:

“While South Korea and even Japan seek to improve ties with China and with Vietnam moving towards a policy of dialogue regarding the South China Sea dispute, India is increasingly the odd one out when it comes to a multifaceted policy of hostility towards China.

In order to facilitate its policy of hostility towards the world’s most dynamic economy, India has attempted to form partnerships with countries ranging from Japan to some ASEAN nations and the United States. While Japan can do little other than sell India goods it can barely afford including overpriced bullet trains and while few Asian countries including India’s ‘gateway to ASEAN’ Myanmar have indicated a preference for India vis-a-vis China (the opposite is generally true for Myanmar), the US is the real ‘mover and shaker’ behind Modi’s dream of an ‘Asia without China’….

The United States under Donald Trump has intensified the Obama era policy of attempting to turn India into a “security and trade partner” of the United States which in practical terms means that the US is happy to sell India a plethora of arms based on sales strategy that indulges the Sinophobia of many ruling Indian elites.

While both George W. Bush and Barack Obama helped increase bilateral trade between India and the United States, Trump presents a far more complex picture when it comes to trade with any Asian country. Yet there is also another angle to the Trump-Modi tango.

In the early 2000s, when Narendra Modi was Chief Minister of Gujarat, he was banned from entering the US due to gross human rights violations concerning the anti-Muslim pogroms in Gujarat. While Modi’s shift from Gujarat leader to national leader has seen Modi’s brand of Hindutva extremism lead to a rape epidemic and a general atmosphere of violent hostility towards Muslims, other religious minorities, ethnic minorities and Dalits, he is now not only welcomed but openly embraced by Donald Trump and his daughter Ivanka who recently toured India as Modi’s guest.

When it comes to geopolitics, Trump and Modi see eye to eye on many issues. Both are unabashedly pro-“Israel”, both openly harbour anti-Chinese sentiments and perhaps the thing that endears Modi and Trump together more than anything else is an open bigotry towards Muslims.

Because of this, Trump and Modi are in many ways ideological brothers, but then comes the issue of money”

Now it would appear that the penny has dropped and that Modi must now face being targeted by the US for the same reasons that Washington has targeted China. Like China, India is a large Asian nation with a growing economy that runs a trade deficit with the United States. This means that when it comes to tariffs, India will likely not curry favour with the US any more than China simply because Modi has essentially prostituted his government to the US strategy of “Chinese containment” in Asia. Thus far, Washington has not shown any signs of willing to grant India tariff exemptions anymore than this is the case with longstanding allies like Canada, Mexico and the European Union. If anything, while China has leverage to make its retaliatory tariffs against the US meaningful and in so doing, forcing the US back to the negotiating table, India is clearly at a disadvantage in this respect.

 

 

While Modi has forsook India’s long standing security partnership with Russia in order to ingratiate himself to Washington and while Modi and Trump both appear to genuinely harbour a worrying hatred of Muslims, when it comes to economics – Modi is in the same boat as China, only this proverbial boat has a much smaller crew than Xi’s.

The problem for Modi is that he has worked so hard to alienate a potential Chinese partner that the only thing standing between India and economic isolation with its neighbours is the fact that China has always held the door open for reconciliation with India, even during last summer’s tense standoff in the Donglang /Doklam region.

Even many Hindutva media outlets in India are now stating that a gradual reconciliation with China may be on its way and while such outlets continue to discuss such matters with unnecessarily negative overtones, the fact of the matter is that if the US and India are diving headlong into a trade war, India will need to open itself to partnerships with China and in the long term, will need to integrate its own North-South Transport Corridor into One Belt–One Road. Such proposals have recently been strongly hinted at by Pakistani officials while the other major states participating in the North-South Transport Corridor including Iran, Azerbaijan and Russia, have no hostility towards the One Belt–One Road initiative. In fact Iran and Russia in particular are enthusiastic participants in the One Belt–One Road project.

 

 

In choosing to put most of his trading eggs all in a single American basket, Modi has now found himself with egg on his face as nothing he did to alienate Russia and provoke China and Pakistan have been able to save him from the wrath of the protectionist Trump administration.

Likewise, while Modi still continues with his attempts to lure south east Asian nations towards partnerships with India, even the most Sino-sceptic ASEAN states, namely Vietnam, are actually increasing their bilateral trade with China. Here too, India cannot complete with China on the zero-sum model that Modi tends to favour, although under cooperative schemes with China, India could play a positive role in south East Asia.

None of this is written to belittle or write off the large Indian economy, but the plain facts are that while India’s economy is experiencing innumerable growing pains, China is well on the road to what Xi Jinping calls the moderately prosperous society.

If India seeks social stability, a more sustainable growth model, a narrowing of its breathtakingly large wealth gap and a long term goal of joining China in reducing and eventually eliminating poverty – wishing and hoping that Trump will exempt India from tariffs is simply foolhardy.

India can become strong, peaceful and more internally stable by working with its neighbours or it can exacerbate problems on all sides by attempting to rival China in terms of regional influence while at the same time trying to use the WTO against a US trade war in which India has been shown no mercy in spite of Modi’s policy of putting the US interest before the interests of south Asia.

 

 

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