Has India really become Trump’s top target in Asia?

Has India really become Trump’s top target in Asia?

If there was one thing analysts could agree on in the run-up to last year’s US presidential election, it was that the next occupant of the White House would be a China hawk. A hardline stance towards the world’s second-largest economy had been firmly bipartisan for years, while the big China problems confronting America’s next president called for a tough approach.

On trade, the only question was whether tariffs on Chinese goods would be more punitive and broad-based. There was also intense speculation about what the new administration would do if other countries – particularly in Southeast Asia – became even bigger re-routing hubs for Chinese exports.

When it came to technology, it was almost a given that the next president would maintain export controls on advanced semiconductors to preserve the US economic and military edge in artificial intelligence (AI). In foreign affairs, support for the security of Taiwan – which produces over 90 per cent of the world’s most sophisticated chips – in the face of the People’s Liberation Army’s intensified posture around the island also seemed a near-certainty.

The wild card, however, was the transactional approach to policymaking often favoured by Donald Trump during his first term as president. Following his re-election, Trump appeared to be a China hawk, appointing staunch critics of Beijing to top roles and raising tariffs on Chinese goods to prohibitively high levels.

Yet Trump’s capriciousness, his well-known admiration for Chinese President Xi Jinping and his administration’s belated recognition of the strength of Beijing’s retaliatory weapons – particularly new curbs on exports of rare earths and magnets – have contributed to a significant shift in the geopolitical landscape since April.

With China likely to secure another 90-day extension to the current tariff reprieve amid signs a trade deal between the two countries is taking shape, India has suddenly become Trump’s bête noire. Having initially turned a blind eye to its close relations with Russia, Trump is now using India’s purchases of cheaper Russian oil as the pretext for imposing one of the highest tariff rates on a major economy.

By accusing India of helping fund Russia’s war on Ukraine through increased oil imports – Russia is now India’s largest supplier, accounting for about one-third of its imports of crude oil – the Trump administration has exacerbated tensions between Washington and New Delhi, including over India’s high average tariff rate, which stems mainly from its heavily protected farming sector.

However, it is Trump’s political motives that matter most. The president’s warm personal relationship with Indian Prime Minister Narendra Modi, and the strategic importance of India as a counterweight to China, are no longer as valuable to him. Trump’s decision on August 6 to levy an extra 25 per cent tariff on Indian goods on top of the 25 per cent rate he announced last week shows the extent to which his U-turn on the war in Ukraine is driving US trade policy.

The politicisation of tariffs on India is part of a deplorable pattern. Canada and Brazil have also been hit with exceptionally high levies, mainly because of Trump’s dislike of both countries’ governments.

Taiwan, meanwhile, is being used as a bargaining chip by Trump to win trade concessions from Beijing. In an indication of the degree to which the president’s erratic policymaking has changed the geopolitical landscape, the United States has eased China’s access to advanced chips by allowing Nvidia to resume shipments of one of its specialist AI chips to China despite fierce objections from industry experts and US officials.

Still, it is important to put Trump’s trade aggression towards India and other countries into perspective. First, while politically driven trade policy is unpredictable and can be very harmful, the damage can be undone relatively quickly.

Trump’s conflicting motives for imposing tariffs – protecting industries, raising revenue to fund his tax cuts, coercing countries into helping him advance his political agenda and spreading chaos.

Moreover, even Trump can push his luck only so far. “The varied rationale for trade taxes and the unpredictable way in which they are imposed might strengthen the legal case against them,” said Paul Donovan, chief economist of UBS Global Wealth Management.

Second, India is a relative minnow in US trade. It did not even figure among America’s top nine trading partners in 2024. While this gives the US significant leverage over India, it underscores the overwhelmingly dominant role of China in US trade policy towards Asia.