Flexibility and awareness will help India deal with Trump (again)

India navigated relations with the United States quite skilfully during the first Trump administration, better than many other US allies did. Doing so a second time will be more difficult, but India’s strategic awareness and manoeuvrability will help it work with Donald Trump’s America once again.

The chaotic early months of the Trump administration have shown Washington’s partners that they must carefully navigate relations with the US for the next few years.

Indo-Pacific partners will likely fare better than European ones, as China appears to be a key and continuing concern for the US. And among Indo-Pacific partners, India probably stands to do better than others. India generally and Prime Minister Narendra Modi in particular show strong understanding of the game when they refrain from reacting to Trump’s negative comments.

This is unusual: the Modi government has usually been somewhat sensitive to outside criticism. Modi may be looking to the day when Trump moves on from whatever unpalatable comments he makes.

The bilateral relationship saw impressive wins during the first Trump administration. The US changed the name of its Pacific Command to the Indo-Pacific Command, acknowledging of the growing strategic role of India in the region. The US also granted India Strategic Trade Authorization Tier-1 status. This provided India with license-free access to a range of military and dual-use technologies and was a clear recognition of the enhanced confidence in US-India strategic partnership. As well as this, India developed and maintains multiple tracks of engagement with the US, including through its national security advisor, affording it greater flexibility.

There were also minilateral successes, with the Quad’s rejuvenation recognising India’s importance to the US. Many of the improvements made during the Trump administration were further strengthened under Joe Biden’s presidency.

On the other hand, Russia’s invasion of Ukraine put India in a difficult situation because of New Dehli’s traditionally good relations with Moscow. India was unhappy with Russian President Vladimir Putin’s naked aggression, but also reluctant to abandon its old partner, leading to some unhappiness in Western capitals with what was seen as India’s hypocrisy. In part, India’s reticence to upend its relationship with Russia was due to a lack of confidence that the US’s shift to New Delhi (and away from Beijing) was permanent—a view that other US allies may now understand better than they did.

Trump and his administration appear to favour a transactional approach to dealing with the Putin regime. This is causing concern for the US’s NATO allies while also making it less likely that the US will pressure India on its relationship with Russia. New Delhi can likely breathe easy on this point for the next four years.

But Trump’s tariff pressure presents other challenges. In the previous term, India managed to satisfy Trump with a few concessions alongside general goodwill and ideological messaging. This time, Trump is clearly much more determined and focused, especially on countries like India with which the US has a significant trade deficit.

This will likely be harder for India to manage this time around. India will have to concede much more, but it still has options to satisfy Trump. India may be helped by the fact that the initial tariff roll-out has been chaotic and confusing, with tariff rates and targets being changed seemingly every day.

Most tariffs have been postponed for few months, and the US is welcoming offers to negotiate bilateral trade agreements. This gives New Delhi a chance to once again use its diplomatic skills to secure a reasonable deal with Washington. Amid US-China tensions, India will also be acutely aware of the opportunities presented by Trump’s increased focus on China’s unfair trade practices.

India has room to manoeuvre. For example, automobile tariffs are one of Trump’s key focuses. Indian tariffs on direct automobile imports are high, at more than 100 percent. New Delhi appears reluctant to lower them, partly because of fears that it could hurt India’s thriving domestic automobile and auto parts manufacturing sector.

However, India will not be an easy market for US automakers to break into, even with low or no tariffs. Both General Motors and Ford, who had entered the Indian car market and established factories in India to compete more effectively, found that not all their products well suited the market. Even if India removes tariffs, it is difficult to imagine US manufacturers competing effectively in India.

Similarly, India has some options on the energy front too to entice Trump. India’s external affairs minister, Subrahmanyam Jaishankar, recently suggested that India might amend its nuclear liability law, which has prevented the US entities from entering the Indian nuclear sector.

US nuclear engineering company Westinghouse planned to build nuclear plants in India until a bill passed in 2010 imposing such onerous liabilities that it effectively prevented new plants from being built. If India does change the liability law or its provisions, it could stimulate not only the US nuclear power industry but also its own nuclear sector.

India could also buy petroleum from the US, reducing its trade surplus with the US of nearly US$50 billion and pleasing Trump.

India’s annual oil import bill is now well north of US$100 billion and will only increase. Redirecting purchases to the US would have negligible effect on the Indian economy.

Finally, India could buy more weapons from the US. Trump does appear to want to sell more US weapons, and India needs to keep buying as it faces a growing threat from China. There has already been some talk of the US offering Lockheed Martin F-35s.

Though dealing with Trump may be difficult, New Delhi does have some options, especially if it keeps turning the other cheek to his criticism. The Indian government does appear to recognise the need to keep Trump happy. This combination of strategic awareness and room to move may help India to manage the second Trump administration better than other US partners do.