Prickly points: Editorial on India-US trade deal and the perils of American unpredictability

Donald Trump has stated that a trade deal between the United States of America and India is “pretty close”. That, in itself, is not a remarkable statement. Several Indian ministers have made similar remarks. But what was significant about Mr Trump’s statement was his insistence that the deal could be of a different kind. Admittedly, details about the trade deal between New Delhi and Washington have remained sketchy even as negotiations — a hint at points of divergence? — have continued. But some points have stoked concern. It is understood that the deliberations are pivoted on the February 6 framework of this year under which the US pledged to reduce its reciprocal tariff on India from 25% to 18%. The same month, the US Supreme Court struck down the edifice of reciprocal tariffs: Washington has not made noises about an alternative to the clipped tariffs. Have New Delhi’s concessions remained unchanged? Would they deepen the US’s footprint in sensitive areas of India’s domestic economy? Worse, a trade deal with the US does not seem to serve as a guarantee for protection against tariffs. Japan, South Korea and the European Union granted steep concessions to the US: Washington responded with Section 301 tariffs on several of their exports. Can New Delhi ensure that Indian exporters would receive immunity from such punitive tariffs? Moreover, Japan and EU nations enjoyed an advantage over India in their deal-making with the US: they host sensitive American military assets. India does not have such a bargaining chip. Could the trade deal lead to Washington arm-twisting India into altering its traditional defence relationships?

A belligerent, unpredictable US under Mr Trump is not a reliable partner — in trade or otherwise. Consider the US president’s decision to suspend, for 60 days, a plan to impose up to 100% tariffs on China, India and other countries that are major buyers of Russian oil. This move has coincided with Mr Trump’s latest outreach to the Russian president and his efforts to bring diesel prices down from record highs just before the US mid-term elections. But India, like other countries, knows that Mr Trump’s decisions on trade and energy are fickle. That is why India will view the temporary waiver of penalties with cautious relief. The US secretary of state may make symbolic visits to a prominent Indian refinery but what New Delhi needs is consistency on the part of US policy — on the trade deal and energy security.