India has marshalled its diplomatic skills with finesse to effectively repulse the tariff tantrums thrown by United States President Donald Trump ahead of the G-20 summit in the Japanese city of Osaka. Initially, it appeared that the ongoing tariff war between India and the US had the potential to eclipse the summit and also derail the meeting between Trump and Prime Minister Narendra Modi on the sidelines of the key summit. However, the bilateral meeting went off very well with the two leaders skirting the contentious issues and focusing only on the positives. As is his wont, Trump took to Twitter, ahead of his meeting with Modi, to do some tough messaging and demanded that India should withdraw the tariffs imposed on 28 US goods, saying it was unacceptable to his country. Clearly, the maverick President’s statement was a pressure tactic ahead of his talks with Modi. The fact that tariff disputes and other trade-related matters have been left out of the purview of their meeting show that the two countries need to look beyond the points of disagreements and consolidate on the strategic part of the relationship. While the strategic side showed convergence on issues such as terrorism and the need for closer defence interaction, the economic side of the relationship needed to be worked on. Significantly, Trump did not raise the issue of S-400 missile system that India is buying from Russia, which was earlier seen as a sticking point.
India’s retaliatory tariffs followed the Trump Administration’s decision to terminate special trade status to New Delhi under the Generalised System of Preference (GSP). The impact of the termination will be felt in some of the key sectors because the previously protected Indian merchandise will now come into direct competition with China and dampen prospects for India’s exports to the US. The tariff tantrum of Trump began last year when his administration hiked tariffs on import of aluminium and steel from many countries, including India and the European Union. He followed it up by ending the GSP for certain Indian items such as textiles and jewellery. In the name of his ‘America First’ narrative, Trump has been adopting policies that often border on protectionism and harm the spirit of multilateralism. Against this backdrop, it was significant that at a gathering of Brics nations on the sidelines of G-20 summit, Modi, along with leaders from China and Russia, emphasised the need for upholding multilateralism and fighting the tendencies of protectionism and unilateralism. Even on the issue of Iran, India took the position that there was a need to maintain stability in the Gulf region. With nearly 8 lakh Indians working in the region, India becomes an important stakeholder in building peace there.