Cold winds in the Modi-Trump friendship

When Trump was sworn in for his second presidency in January, India was leading the pack among countries with the most positive expectations for its relationship with America. However, that doesn’t seem to be the case. It’s true that there has always been an air of optimism in the relationship between the two countries. And frankly, this optimism is fueled by a high level of bipartisan consensus in Washington on deepening bilateral ties. Even more visibly, there’s the belief that Modi and Trump share compatible worldviews. Both are strong populist leaders who view China and radical Islam as existential threats. And both are, at their core, economic nationalists. Moreover, India is in a unique position: it is neither an ally nor an adversary of America. Consequently, it wasn’t subjected to Trump’s wrath like others were.

However, Trump, who is now trying to broker another ceasefire in Ukraine, is leveling harsh threats against India over its trade with Russia. He said that because Delhi’s “massive” oil purchases are financing the “Russian War Machine,” it would face tariffs far heavier than the 25% imposed last week.

Historically, India purchased most of its oil from the Middle East, including Iraq and Saudi Arabia. But things changed after Russia’s invasion of Ukraine in February 2022. India, the world’s third-largest crude oil importer after China and the US, began to snap up Russian oil, which was being sold at discounted prices following its shunning by some in the West. Before the war in Ukraine, Russia accounted for only 0.2% of India’s oil imports, but it has since become its largest supplier, providing a share of between 35% and 40%. In July alone, Moscow supplied 36% of the crude oil imported by India, which is then refined into fuels like gasoline and diesel.

And yes, amidst all the sanctions, New Delhi remains one of the leading buyers of Russian crude, and over 50% of India’s active military platforms are of Russian origin. And yes, what’s even more ironic is that amidst the war and sanctions, Delhi, which buys Russian oil on the cheap, is exporting it at a profitable price to Europe—the very continent that cannot buy it due to Trump’s sanctions.

As Trump said, again in a social media post, he accused India of buying “large quantities” of oil from Russia and then “selling it on the Open Market for big profits.” He added, “They don’t care how many people the ‘Russian War Machine’ is killing in Ukraine…”

Furthermore, there is the threat of a 200% tariff on pharmaceutical imports, which is significant for India as a leading supplier of generic drugs to the US, and a 10% tariff on BRICS member countries for pursuing “anti-American” policies. Washington also announced that it has imposed sanctions on some Indian entities and individuals for trading with Iran.

IN SHORT, the developments of the last week or two, in particular, both show how sentimental Delhi’s expectations for the bilateral relationship were and call the Modi-Trump friendship into question. It seems that this time, Trump has started to brandish a bigger stick. And remember, while threatening to impose 25% tariffs on India, he used some harsh and mocking language that did not sit well with Delhi at all: he described India as a “dead economy,” for example. And he portrayed it as a country that does “very little business” with the US and has the “heaviest and most egregious non-monetary Trade Barriers of any country.” This could just be a bluff aimed at securing a profitable deal for America in the midst of trade negotiations, given that Trump’s style of address is now well-known. Or it could be a warning to India.

Frankly, the “reciprocal” tariffs Trump announced in April had given rise to cautious optimism in Delhi, with the belief that they would allow for some trade diversion from China and other countries whose supply chains are heavily exposed to China, especially in South and Southeast Asia. India’s Commerce Minister, Piyush Goyal, for instance, had described Trump’s tariffs as a “once-in-a-lifetime opportunity.” Corroborating this view, Apple announced it was shifting its iPhone production for the American market from China to India.

Amid expectations that India would be one of the first countries to sign a trade deal with America, Delhi maintained its positive attitude. So much so that some circles in Delhi even held the view that Trump’s tariffs could be a “blessing in disguise,” acting as a catalyst to accelerate India’s much-needed economic reform agenda. Let me add a similar note here from Indian history by pointing out that previous external shocks, from the 1991 balance of payments crisis to the economic sanctions following its 1998 nuclear tests, had triggered the country’s first generation of reforms.

Now, the mood seems to have shifted. Cold winds are blowing in the Modi-Trump friendship and/or India-America relations. In fact, the mood had already changed with Trump’s stance on the recent India-Pakistan conflicts. Although Delhi denied it, Trump’s claim in May to have mediated a ceasefire between the two countries, coupled with his efforts to deepen relations with Pakistan by hosting Pakistan’s Chief of Army Staff Asim Munir at the White House in June and making resource and cryptocurrency deals with Islamabad, had triggered the chill between Delhi and Washington. The fact that Trump announced a trade deal with Pakistan on the same day he announced tariffs on India was the salt in the wound.

Trump may appear to have reversed the US’s more conciliatory approach towards China from his first term, but Delhi now fears that Washington might seek a “deal” with China. Let me say this very clearly: despite the deepening India-America relations, or no matter how deep they become, there is always a fear of strategic abandonment in both countries. However, let me also state clearly that Trump’s recent outbursts will not change the overall trajectory of the bilateral relationship. In other words, the relationship will continue with two steps back for every one step forward. Or we could call it a “cautious embrace.” But on Delhi’s side, the inclination for this has undoubtedly diminished. Even if a trade deal is reached, Delhi’s deep-seated, long-standing mistrust of America has once again been reinforced.

However, it should not be overlooked that India also maintains extremely close, friendly, and strategic relationships with countries with which America and the West have a difficult history, including Russia and Iran. And America may have started to question why it has done so much for Delhi; recall the civil nuclear deal or the support for India’s G20 presidency or its bid for a permanent seat on the UN Security Council—recall all of it. Trump may now be trying to tell Delhi, “Your free pass is expiring; it’s time to fall in line.” In other words, as I said at the beginning, he is starting to wield the stick more forcefully. Trump has likely had his fill of India’s “strategic autonomy” mantra [a core principle of Indian foreign policy], or is about to. Of course, Delhi is aware of this, which has led to discussions about the revival of the long-dormant RIC (Russia-India-China) trilateral and Modi’s probable attendance at the Shanghai Cooperation Organisation Summit in China this month. If Delhi realizes that its relationship with America is not as special as it perceived, the cold winds in bilateral relations could blow even stronger.

The Modi administration, currently engaged in tough negotiations with Trump’s team for a trade deal that balances India’s protectionist system with opening its market to more American goods, is thoroughly displeased with Trump’s statements. It is also uneasy about reports that India is willing to open up to some American agricultural products, a politically sensitive issue for Modi, who faced a year-long farmers’ protest a few years ago.

Considering Modi’s carefully crafted strongman reputation, many expected India to react harshly to Trump’s tariff threats…

The main opposition, Congress, for example, sharply criticized the government: “Trump is talking nonsense against India and Modi is listening silently,” it said, asking, “Why is Modi so afraid of Trump?” in a Hindi post on the party’s social media platform. Another Congress post stated, “Tariffs are being imposed. Negotiations are going nowhere. But Asim Munir, the man behind the Pahalgam terror attacks, is having lunch at the White House… This is what happens when foreign policy focuses on image-building instead of national interests.” Jairam Ramesh, Congress General Secretary in charge of Communications, mocked the BJP’s past slogans and diplomacy, saying the US’s actions exposed the failure of an image-driven foreign policy.

However, a very cautious response came from India’s Commerce Minister, Piyush Goyal, who said the two countries were working towards a “fair, balanced, and mutually beneficial bilateral trade agreement.” India’s Ministry of External Affairs also stated in response that it would take all necessary steps to protect and promote national interests and that the effects of the tariffs were being examined.

The view that Trump’s words are purely a pressure tactic is likely being taken into account… Trump is trying to play hardball in the negotiations… This is the general conclusion reached in Delhi circles.

Meanwhile, five rounds of negotiations have been held between the two countries so far. For the next round of talks, a US delegation will arrive in India on August 25. The talks will continue until August 29.

Ashok Malik, a former policy advisor to India’s Ministry of External Affairs, had said, “This is a testing period for the relationship”; we will see how the duo fares in this test. If you ask me, I am neither too optimistic nor too pessimistic. It may sound like a very political answer, but that is the political nature of this duo’s relationship; the “cautious embrace” continues… However, India has already begun to question the value of its strategic cooperation with Washington. Many in New Delhi are asking why Washington is deepening ties with Pakistan, a country that actively undermines India’s security, especially after decades of meticulous work to build the India-US relationship. Although some are drawing hopeful conclusions from this, especially in the context of the RIC trilateral, do not forget that India has a sensitive and risky relationship with China. And the primary rationale for the closer India-US relationship was simple: India is the only democratic power in Asia with the capacity to balance China’s growing assertiveness. Frankly, this rationale is still valid, and the need is becoming more urgent by the day. Washington cannot afford to alienate its reliable—and, until now, coddled for this very reason—partner in Asia.