In calendar year 2024, the US had a goods trade deficit of $1.2 trillion. China with $275 billion, Mexico at $160 billion, and Vietnam at $115 billion run biggest trade surpluses with US. At $45 billion, India’s trade surplus with the US ranks at tenth place. However, if the US is keen to cut its trade deficit, then Asia and Latin America are surely going to be the prime targets for the US. Even if we extend all type of concessions to the US, it is unlikely that Trump would be in a position to withdraw the tariffs entirely. 

While Trump has offered lip service to the Indian cause, several events belie the genuineness of such intent. The first is the 3.5% excise tax on remittances. India is one of the biggest remitters of funds from the US to India, so it is clear who the target of the tax is. Secondly, the decision to ask prestigious Harvard University to stop foreign students flow is also targeted at India. Nearly 20% of the 25,000 students studying in Harvard are from outside the US. Nearly 16% of these outside students at Harvard are from India. Once again, it is very clear who Donald Trump is trying to target. 

One must admit that Trump’s role in the India-Pak standoff in the border issue has been rather dubious. In a bilateral issue, Trump makes the announcement of a truce, something that must have been made by the foreign minister of India or Pakistan. Trump continues to arm Pakistan with latest fighter plans, knowing their intentions and their track record fully well. There are also reports that the US pushed for a more lenient stand towards Pakistan at the insistence of China. After all, there were already concerns that the steep tariffs on China were likely to push up the inflation level in the US to 4.0% levels. That was not a palatable macro scenario for the US. 

India must not count too much on the support of either the US or Russia. After Europe banned Russian oil, it has been substantially dependent on China to buy its crude. Hence, Russia is unlikely to go against the wishes of China. For the first time, India will be forced to tread a very lonely path on the diplomatic front. One thing is clear; India must not count too much on a trade deal with the US. Also, today diplomacy has become largely transactional, and that alone is likely to drive diplomatic interests. India must also make it clear to the US that it will accommodate them only up to a point. That is an essential message when you are negotiating with hard bargainers!