Donald Trump seeks tariff reciprocity with countries like India, offering potential advantages

Already in huff'n'puff mode, US president-in-a-month Donald Trump is seeking tariff reciprocity with countries like India - 'They tax us, we tax them'. This may not be beyond reach, and if managed well, could be converted into an advantage, for India. India has come up for a special Trump mention against more sweeping threats aimed at China, which consistently runs up a huge trade surplus with the US, and BRICS, where rising trade within members could potentially reduce the dollar's role as medium of exchange. On strategic grounds, China faces the brunt with the threat of punitive tariffs. Other special mentions such as Canada and Mexico have to be seen in the light of immigration and drug-smuggling. Brazil, co-accused with India of running high tariffs, is making its presence felt in energy production with rising Chinese involvement.

India is the odd man out with no obvious strategic subtext to Trump's tariff threats. The US and India stepped up their engagement during Trump 1.0 and ties have strengthened under Biden. New Delhi successfully defused episodes of trade tension with Washington till the onset of Covid, and built on the gains in the post-pandemic global quest for supply chain resilience. India's exports to its largest trade partner have overcome Trump's withdrawal of benefits under the Generalised System of Preferences (GSP). Trade concessions are easier to make when tariffs are raised with a smile, as is India's wont.

Trump's energy policy could emerge as a strong shield against India's primary import vulnerability. The promise of cheap oil makes dealing with Trump easier for New Delhi. Additional comfort can be drawn from Trump's intent to end the Russia-Ukraine conflict that is keeping food prices elevated. India has a struggle going around Western sanctions against Russian oil, which Trump believes serves little purpose. India will also face less pressure over climate mitigation commitments. On balance, it may be easier to do business with Trump 2.0 despite (because of?) 'reciprocity' in the air.