India seeks a fair trade deal with US, not capitulation before an egotistical Trump who suffers from God complex

There’s a huge amount of anger and disappointment in India over Donald Trump’s latest comments. I think we have got this wrong though. Look beyond the provocation, and you’ll see instead a vexed US president, frustrated and angry at not getting his way and resorting to intemperate language and juvenile insults to put pressure on New Delhi and tilt the scale in his favour.

Trump is threatening to slap massive tariffs on India. The final figure is anybody’s guess, but it could be more than even 35%. He is needling India on Pakistan and has taken aim at New Delhi for buying Russian oil and prioritizing energy security for its people, a reality that he seems to have suddenly woken up to.

Since Wednesday, the US president has sent a volley of abuses and warnings India’s way. It is a bit of a surprise after we were told multiple times that both sides are very close to clinching an interim deal, and US trade representative Jamieson Greer said as recently as Tuesday that “we continue to speak with our Indian counterparts, we’ve always had very constructive discussions with them.”

Which tells us that Trump’s invectives are largely a negotiating tactic. This is an American president who revels in breaking rules and shattering norms of diplomacy and weaponizes access to American market through predatory tactics. Trump did mention that negotiations with India are still on, and American negotiators have admitted that more talks are needed to crack the deal. A team of US trade officials are due to visit India on August 25 for the next round of talks.

So, at one level, Trump is poking, probing and hammering away at India’s red lines, hoping to put Narendra Modi government on the backfoot. This ought to tell us that Trump, who has tapped into the wellspring of victimhood that defines the MAGA movement, sees trade deals as economic warfare, trade deficits as rank exploitation and anything less than total capitulation, unacceptable.

Trump has taken an extraordinary bet on the importance of American market in global economy and believes that he has a leverage so unique that he can do almost anything. His trade policy is incumbent on the rules of hard power and economic interests. The US president wagers that no country on earth can afford to ignore the lure of American market.

Therefore, for Trump, any trade deal that does not yield disproportionate benefit for America is intolerable, even bordering on hostility. He revels in the self-claimed role of a ‘tough negotiator’ and is not averse to taking a disruptive approach – using anything and everything as leverage to get what he wants.

Trump’s outburst at India, therefore, may be interpreted as a public display of irritation at India’s continued defiance and unwillingness to make significant concessions. For example, despite Trump’s relentless sound and fury, India has responded with a polite but firm statement, pointing out that both sides “have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months” and remains “committed to that objective.” The fact that India refused to take the bait likely aggravated Trump’s annoyance.

At another level, some of Trump’s tirades against India – “obnoxious”, “dead economy”, “very little business” – are easily disproven and suggests a sense of personal injury rather than public negotiation. Evidently Trump, who’s been behaving more like the emperor of the world than an elected politician in his second stint, has taken grave offence at India not validating the lie and repeatedly defying his claim that he engineered the ceasefire during Operation Sindoor.

India committed the original sin by not publicly thanking Trump, unlike Pakistan, for brokering the ceasefire – that to him is an important step towards getting that coveted Nobel peace prize – and compounded the problem by insisting during Parliamentary debates that the US president had nothing to do with defusing the crisis. Trump possibly didn’t enjoy his “good friend” Modi reiterating in Lok Sabha that “not a single world leader asked India to stop Operation Sindoor”.

But what really got Trump going against India was New Delhi’s keenness to drive a hard bargain and not kowtowing to Trump’s unique style of parley. If you’ve been watching Trump’s trade negotiations closely with other countries since he announced unilateral tariffs on all American trade partners on April 2, you’d have noticed a definite pattern.

The US president has little patience for due process or well laid out procedures. He lets minions strike up a rudimentary deal with the opponents and then barges into the negotiation with a maximalist position to get the best possible outcome and lay his stamp on the deal. If we perceive this as an economic warfare, then Trump tries to dominate the escalation spiral and answers retaliatory tariffs with a much higher levy, persuading the rivals that they really can’t win this game.

Trump’s opening gambit is usually such a high figure that any lower revision eventually arrived at appears as a “win” for rivals, while Trump walks away with an extractive deal where his opponents have agreed to significant discounts without an equivalent concession from the US. But the deal still isn’t through until Trump gets a headline commitment that he may use to juice up his announcement.

For example, Trump slapped a 25% tariff on South Korea and then gave them a chance to “buy down” the tariffs and make him “extremely happy”. As Korean negotiators rushed to Washington, a deal was eventually hammered out where, according to Trump’s post in Truth Social , “South Korea will give to the US $350 Billion for Investments owned and controlled by the United States, and selected by myself, as President. Additionally, South Korea will purchase $100 Billion of LNG, or other Energy products and, further, South Korea has agreed to invest a large sum of money for their Investment purposes.

“South Korea will be completely OPEN TO TRADE with the United States, and that they will accept American product including Cars and Trucks, Agriculture, etc. We have agreed to a Tariff for South Korea of 15%. America will not be charged a Tariff.”

Korean industry minister, who led the team in striking the deal where the Korean side settled for a 15% tariff, told Reuters that they “role played” as the US president to prepare for negotiations, and the secret to melt Trump’s heart was to call him a “great person” and “speak as simply as possible”.

Or take the case of Japan, who made such major concessions that Japanese negotiators are facing questions back home. Faced with a 25% levy, Japan eventually arrived at 15% tariff on its exports but only after promising an investment of $550 billion upfront “to rebuild and expand core American industries… in areas including energy, semiconductors, critical minerals, pharmaceuticals, as well as commercial and defense shipbuilding.”

Trump called it a “signing bonus”, and told reporters that “what Japan did is they brought down their tariffs… They gave us $550 billion upfront, 100 per cent. We get 90 per cent, they get 10 per cent.” Though Japan is contradicting Trump’s version of the negotiation the bottomline is trading partners are not only coughing up a steep price for getting access to the American market, they are also making notable commitments for Trump to flag as ‘unilateral achievements’.

EU Commission chief Ursula von der Leyen ran to Scotland to strike a deal with Trump and got bulldozed with such an agreement – 15% tariff on most European exports – that furious EU members are calling it a “dark day”, “capitulation”, while Trump labelled it “the biggest deal ever”. French prime minister François Bayrou condemned the agreement as a “submission”, Hungarian PM Viktor Orban said: “Trump ate von der Leyen for breakfast” while Germany called it a “painful compromise”.

Worth noting that while South Korea, Japan and even China are export-driven economies and rely heavily on the American market, the EU is a vassalage under the American security umbrella and America is its largest trade destination.

It’s a little different with India. New Delhi is a strategic partner, not a treaty ally, and caters primarily to a strong domestic market. While the US is India’s largest foreign export market with bilateral trade amounting to $190 billion, America is India’s 10th largest goods partner. India does enjoy a trade surplus, but it is by no means “massive”, as claimed by Trump.

Compared to China’s trade surplus of $270.4 billion, Mexico’s $157 billion, Vietnam’s $113 billion or even Ireland’s $80.5 billion, India is placed on the 11th spot with a surplus of around $41.5 billion according to latest figures for 2024-25.

India’s exports to the US for fiscal 2024-25 were about $86.5 billion. With a nearly $4 trillion GDP, India’s exports to the US stand at roughly 2% of its GDP, that places it on the 10th spot relative to other US trade partners. For instance, Mexico’s exports to the US stands at 16.1% of its GDP, Canada’s 13.4%, while Chinese exports to the US forms 10.2% of its GDP.

It basically means that while India will suffer a deep setback if it fails to drive down the threatened tariff of 35% or more, it won’t be an existential crisis. Moreover, roughly about 89% of India’s exports go to non-US markets, including the EU, West Asia, ASEAN, China, and other destinations.

Therefore, while the rupture with the US may deliver a telling blow to the Indian economy, tamper with its ambition to form an important cog in global supply chain, and may even shave half a percentage point off its GDP, it equally provides India with an opportunity for trade diversification with various economies and regions such as Africa, Latin America, Southeast Asia, Central Asia, the EU (with whom we are thrashing out an agreement) or the UK, with whom we have just stitched one.

In effect, these realities offer Indian negotiators precious breathing space and the freedom to walk away from an agreement if the terms for it are onerous. Additionally, what seems to have particularly irked Trump is that while India has been negotiating hard, it refused to play by the US president’s rules.

Media reports indicate that while India and the US held four rounds of talks (apart from virtual meetings) and New Delhi indicated that it was prepared to give access to US in areas that were previously inaccessible, including agriculture, Trump took a maximalist position to prise open the Indian economy like a can of tuna.

Trump has no regard for India’s redlines on agriculture or dairy sectors, cannot care less for the developmental imperatives that form the fulcrum of India’s economic policies, and seeks New Delhi to commit to zero tariffs for American goods in exchange for high double-digit levy on Indian exports to the US. It is none of Trump’s concern, for instance, that India has zero appetite for genetically modified American agricultural crops, and zero tolerance for American dairy products fed on blood meal because a vast majority of Hindu Indians are vegetarians.

It seems Trump was also unable to get Modi on the other end of the phone line. He had been frustrated with the slow pace of negotiations and wanted to reach out to the Indian prime minister for a headline deal. An agreement, according to sources, was ready by the first week of July where it gained dust as Trump started moving around the goalposts to fish for a better outcome, seeking to tear open India’s most politically sensitive segments.

The phone call didn’t work out, and a frustrated Trump started ramping up provocations. This isn’t a surprise. What Trump wanted was a tete-a-tete with the Indian head of state who would make a signature commitment that Trump would immediately sell to his MAGA base as yet another “massive win”. Trump didn’t quite figure out that Modi, the world’s most popular leader in democracies even in his third term, has no intention to whet Trump’s shenanigans.

Trump may have his reasons, but India has none to deviate from established procedures and expose the prime minister to the tantrums of a bully who wields tariffs as tools of blunt coercion.

The situation is grim, but India’s early responses indicate that New Delhi is not going to buckle under pressure. It never did even when it was poorer and weaker, and it won’t now. What India will do is keep calm and negotiate. Trump might be spoiling for a fight but triggering him isn’t in India’s interest.

India understands that it lacks China’s leverage that Beijing built through decades anticipating exactly such a scenario. However, a country as large and diverse such as India, boasting a market next only to China’s in terms of scale, has its own leverage.

New Delhi will resolutely protect its interests and sovereignty and refrain from aggressive or retaliatory moves or statements. The message is clear. India does not seek a trade war, but it won’t be bullied into submission. It seeks a mutually beneficial trade deal that protects and promotes the welfare of its farmers, entrepreneurs and MSMEs, not a trade capitulation. The aim of trading with other nations, for India, is to lift millions from poverty, not to cater to the vanities of an egotistical American president who suffers from God complex.

The writer is Deputy Executive Editor, Firstpost. He tweets as @sreemoytalukdar. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.