Amid all the Trump tariff hoo-haa, Richard Rossow of the Centre for Strategic and International Studies in the US, who was a guest on The Gist, made an interesting point:
“It’s always important to remember that both our economies are less driven by manufacturing than by services. And US services takes up about 80% of GDP and in India that’s about 50%. And in the trade talks so far, when you think about manufactured goods … it’s a relatively small part of our economies.”
Nevertheless, India and the US are at a standoff and Rossow believes that it has not escalated into a fight because India chosen, so far, not to fight.
“India is still trying to pull out of the fire what it can and salvage the relationship, seeing if there is still a chance to get a deal across the finish line .. in which case the relationship improves quite a bit.”
But India is also diversifying, seeking to cement new commercial relationships, what Rossow describes as “deeper commercial relationships with a range of other partners. So great if I can get the deal done but it is thoughtfully building up ties with other partners.”
In his view, India should not have been terribly surprised at what has happened since the strains were visible in Trump’s first term itself. He called India tariff king and complained about the tariffs levied on the import of Harley Davidson motorcycles.
None of this struck “Homeland India”, and the warning signals were ignored. But now, Trump is going after things are a bit more politically sensitive, such as access to agricultural markets.
He acknowledged that “When we talk about opening up ….you are talking about half the population … that’s surviving on growing a decent harvest of potatoes … so I fully understand India has an extreme red line that can’t be crossed no matter how much Trump pushes.”
President Trump is throwing things at India that hit the political base a little more, which creates a different level of danger and concern, he said.
Tune in for more in this conversation with Richard Rossow of the Centre for Security and International Studies.
