US President Donald Trump is on a roll after his re-election, which he believes amounted to a validation of his thinking and policies on the entire gamut of US domestic and foreign affairs. Internally, the Democrats are in disarray after the election loss. With both the House and the Senate under Republican control and the Supreme Court packed by Trump nominees, the system of checks and balances in the US political system has become weaker for the time being.
Trump's slogan of ‘Make America Great Again' has an in-built contradiction. The slogan has domestic resonance, specifically in the context of an economic redressal, of rebuilding America's manufacturing base, US companies investing more at home, creating more jobs, and so on. The slogan appeals to the middle class in particular. However, the question remains, why does he think that America, still the foremost economic, technology and military power, is not great?
Why Is America Not 'Great' Yet?
Trump's leitmotif is that the rest of the world has taken advantage of US generosity and openness and that this is no longer acceptable. He projects a sense of victimhood, whereas many non-Western countries see themselves as victims of the US power over the years. The long list of US military interventions, overthrow of governments, regime change policies, the weaponisation of the US dollar and US control over the global financial system, and the use of sanctions as a tool of foreign policy, constitute the reality of US power. Does, therefore, the vision of ‘Making America Great Again' have overtones of imperialism?
This “Great Again” ambition includes claiming Greenland for national security reasons to counter Russia's domination of the Arctic, the Panama Canal to counter China's control of its ports, re-naming the Gulf of Mexico as the Gulf of America to make it sound less Mexican and more American, repudiating Canadian sovereignty by inviting it to become the 51st of the US, and so on.
This imperial mindset leads to inflicting blows on an already debilitated multilateralism by withdrawing from the Paris Climate Change Agreement, the World Health Organization (WHO) and the UN Human Rights Commission (UNHRC).
Tariffs As Currency
A key component of Make America Great Again through muscle-flexing is using tariffs as a currency of power. Trump believes that the US has been treated most unfairly by other countries, and this includes friends and foes alike, by raising high tariff walls against imports from America while exporting liberally to it given its low tariffs.
Trump has announced the imposition of 25% tariffs on imports for Mexico and Canada, with whom the US trade deficit is huge. He has not treated the issue of tariffs on them only as a trade-related one but also as a point of pressure to compel both Mexico and Canada to curb illegal immigration and the trafficking of the drug Fentanyl into the US. Trump has suspended the imposition of tariffs on Mexico twice in view of its willingness to cooperate. He has also partially suspended some tariffs in the case of Canada. Trump is of course violating the US-Mexico-Canada Free Trade Agreement by imposing these tariffs, but this seems to be of little concern to him.
The US President had already imposed a 10% tariff on Chinese exports and recently announced an additional 10% duty. In the case of China too, he has sought cooperation to control the flow of precursor chemicals to Mexico and Canada for the production of Fentanyl, of which China is the biggest source. China has retaliated with tariffs of its own, especially on US agricultural products.
Trump has not so far imposed tariffs on EU exports to the US, though in his State of the Union Address, he mentioned the EU, China, Brazil, India, Mexico and Canada as countries that unfairly used tariffs against the US and that now it was America's turn to use tariffs against them. He added that India charged 100% tariffs on US auto exports, that China's average tariff on US products was twice what the US charged them, and that South Korea's average tariff was four times higher despite the fact that the US provided so much help to it militarily and otherwise.
Flawed Logic
Trump's reasoning, however, is entirely flawed. India's tariff structure is not US-specific, though it may affect the exports of some US products to the country. India's tariffs are entirely compliant with World Trade Organization (WTO) rules. India and the US have had trade disputes, and these have been subjected to the WTO's Dispute Settlement Mechanism, until the US made this route dysfunctional by opposing its Appellate Body, blocking appointments to it, and raising concerns about its judicial independence.
The WTO rules explicitly allow for “special and differential treatment” of developing countries by developed countries, which gives them more flexibility to adapt to global trade rules based on their development level. It is worth recalling that to bring major reforms in the international trading system, the WTO launched the Doha Round of negotiations (billed as the Development Round) in 2001 with a view to putting the development of developing countries at the heart of trade negotiations, with special and differential treatment for developing countries at its core. Unfortunately, the Doha Round finally collapsed in 2011 because of opposition by developed countries.
It is important to recall India's position during these failed negotiations, as it has a bearing on our interests even as we are faced with Trump's tariff onslaught and trade demands. India supported the Special Safeguard Mechanism (SSM) to protect its farmers from import surges. India wanted rich countries to drastically reduce their ‘trade-distorting 'farm subsidies. It wanted a permanent solution to the issue of public food stockholding in developing countries for the purpose of food security. India also opposed the expansion of the multilateral trading system by negotiating and implementing multilateral agreements on investment, competition policy, government procurement, etc.
A Key Disparity
Very simplistically and unfairly, Trump seeks equality of treatment between the US and India in the matter of trade, rejecting the concept of special and differential treatment. As a $30.4 trillion economy and a per capita income of $88,000 compared to India's nearly $4 trillion economy and a per capita income of about $2,700, the US and Indian economies are far from being equal. This disparity does not take into account America's technological strength, the capital at its disposal, the power of its multinationals, the status of the American dollar as the global reserve currency, and the capacity of the US to weaponise it and the global financial system as a result, and so on.
All said and done, the issue now is not one of arguments but of finding a practical way forward for us. The US has now emerged as India's biggest economic partner in goods and services, the biggest investor, the biggest source of modern technology, and also a major defence partner. The India-US relationship has to be managed in this new context. Faced with a mercurial president who does not spare even US allies, India has had to show some nimbleness in addressing Trump's repeated description of it as a ‘tariff king', of not giving US access to its market, and so on. Even during the joint press conference with Prime Minister Narendra Modi during his otherwise rather successful February 2025 visit to Washington, Trump was quite brutal in his remarks about India's tariffs. He simplified the issue to a certain level of absurdity by stating that the problem of Indian tariffs had an easy solution, because the US would impose matching tariffs on Indian exports under the principle of strict reciprocity.
A Simplistic Approach
Trump has already made it known that he has instructed his Commerce and Treasury Secretaries as well as the United States Trade Representative (USTR) to make a detailed study of not only the tariff structures of countries with which the US has a high trade deficit, but also non-tariff barriers, currency and regulatory issues, etc., which impede trade. Trump wants to precipitate matters, disregarding the complexity of the issues involved. India and the US, for example, do not have the same export baskets in their trade with each other. How would strict reciprocity be implemented? If the average tariff on US exports to India is about 15% and that on Indian exports to the US is a little over 3%, how will this reciprocity be fine-tuned?
India had already done extensive homework on the issue of tariffs before Modi's US visit, during which conversations were also held with US Commerce Secretary Howard Lutnick and USTR Jamieson Greer. India's strategy is to address the issue through a multi-sectoral bilateral trade agreement with the US, the first tranche of which would be concluded by the autumn of this year, when Trump is expected to visit India for a Quad summit. This figures in the joint statement issued on the occasion of Modi's visit.
Waiting For April 2
As a quick follow-up, keeping in mind Trump's declaration that on April 2 he will be announcing the imposition of tariffs on various countries, India had already signalled its willingness to address the issue of tariffs by announcing in the annual budget the lowering of some duties on products of interest to the US. This was noted in the joint statement. India seems ready to make a success of the negotiations on tariffs, given the stakes involved, although agriculture will be a very sensitive issue for it. Commerce Minister Piyush Goyal recently visited the US for talks with Lutnick and Greer, with a message of India's readiness to lower tariffs to expand India-US trade both ways. Trump, always eager to claim success in “deal-making”, has already announced, based on his feedback from Goyal's talks, that India will be lowering tariffs on US goods.
Let's see what Trump announces on April 2. He has India on his mind, but given our anticipatory moves and Trump's changeability, it can be hoped that he will not announce tariffs that might make the negotiations on the envisaged multi-sector trade agreement more complicated. No country likes to negotiate under duress.
(Kanwal Sibal was Foreign Secretary and Ambassador to Turkey, Egypt, France and Russia, and Deputy Chief Of Mission in Washington.)
Disclaimer: These are the personal opinions of the author
