The economic team under US President Donald Trump is quickly developing a new global strategy to combat China, not just with tariffs but also with relationships. At the heart of this strategy is this program? India.
In a Bloomberg statement, Treasury Secretary Scott Bessent described what officials describe as a “grand invasion”: a diplomatic and economic alliance with India, Japan, Vietnam, and South Korea to stifle Beijing and stifle its influence on global business.
They’ve been fine military allies, no ideal economic allies. At the end of the day, we should perhaps come to an agreement with them. Finally, Bessent said, we can team up and approach China.
Why is it important?
- Geopolitics is disguised in illusion in this discussion, not only economy. Trump’s increasing tariffs on China ( some exceeding 140 % ) are the bane. His 90-day price delay on other countries is the vegetable, a window to come up with deals that may reroute trade, rebalance allies, and squeeze Beijing. India might be the key influencer in that perspective.
- Trump’s economic group, led by Scott Bessent, sees business agreements as political weapons as well as economic equipment. The objective is to redesign global supply chains to lessen China-dependence and integrate key people into a US-led financial realm. India is uniquely positioned to buoy this tilt given its large market, anti-China intuition, and ambitions to be a world power.
- Trump’s staff hopes to financially circle Beijing without using traditional relationships by forging deeper relationships with nations surrounding China like India, Vietnam, South Korea, and Japan. This silent but determined alignment is further exemplified by India’s opposition to Chinese companies like BYD and its courting of Tesla and US.
- Decoupling with liquidity: Trump has 90 days to wait new tariffs, giving the US leverage. Countries that negotiate agreements to purchase British goods, halt the cargo of Chinese goods, and impose their own tariffs on China may avoid paying US duties. India sees this as a chance to assert its own national interests while also facing pressure to expand business and increase exports.
- Trump’s impulse remains interpersonal, with zero-sum commerce and great strategy. However, Bessent’s perspective and India’s proper perspective point to something more profound: a long game that adjusts the US as the world’s economic leader not just through tariffs but also through carefully cultivated partnerships that push China to the margins.
- India’s time: With Southeast Asia and Europe mired in tension, Trump’s trade policy may be unavoidable. It’s the only major business that is both a partner and a pivot, big enough, and dubious enough of China to act as a pivot.
Zoom in: India’s crucial position
India’s focus is shifting from a interpersonal to a corporate position.
Officials in New Delhi confirmed that they are putting together a comprehensive bilateral trade agreement ( BTA ) with the US that includes digital commerce, goods, labor mobility, and other aspects.
However, a “zero-for-zero” tariff agreement is not expected because American negotiators say a parity of any kind is only possible between designed nations, according to a report in the Economic Times.
India is rather considering a “package offer” strategy that offers sector-specific discounts on fabric, gems, chemicals, and crops in exchange for US market entry and technology collaboration.
Trump’s objectives are also met by India’s home policy:
- According to a Bloomberg report, it has rejected numerous Chinese investment proposals, including one for a$ 1 billion EV plant owned by BYD.
- It shields regional players like Tata and Mahindra from trade obligations that are among the highest in the world on fully-built vehicles.
- It is putting more pressure on industry roads between Sri Lanka, Oman, and the UAE to prevent Chinese goods entering through secret areas.
“India has a lot of elbow room for trade deals with developed nations,” commerce minister Piyush Goyal said. “But we must be cautious about dumping from China.”
What they’re saying
- Goyal told Bloomberg, immediately mentioning Chinese companies, that” India has to be careful about its strategic objectives, who we allow to invest.”
- White House insiders claim that deals with India are moving along more quickly than those with other nations, partly because of shared concerns about China and India’s somewhat low US tariff coverage.
- Trump stated next year,” Everyone wants to come and render a deal.” The biggest issue for my assistants is that they don’t have enough time to work.
Between the traces
India is hedging rather than acting solely out of kindness.
India continues to be closely connected to Chinese supply chains despite coordinating with the US. For instance, 40 % of Vietnam’s goods come from China, which is comparable to India’s for technology and equipment.
India also aims to change Chinese e-commerce export to the US, especially as Washington imposes 120 % duties on low-value shipments from China starting in May.
If the authorities can cut down on red tape, a statement from Delhi-based think tank GTRI describes this as a “massive prospect” for India’s small businesses, craft exporters, and fashion sellers.
The German glare
The EU is not yet a member of the group, at least not already. President Trump’s blanket taxes, yet on friends, have greatly alienated Western leaders. According to French President Emmanuel Macron, the EU is subject to$ 59 billion in annual tariffs from Washington, which is nearly equal to three years of US military assistance to Ukraine.
Pedro Sánchez, Spain’s prime minister, has officially feigned a China-pin. Bessent was critical of this. Ursula von der Leyen, president of the European Commission, is pushing for a system to track Chinese trade games, but Brussels nevertheless appears reluctant to stand in for Washington.
Former foreign minister of Denmark Jeppe Kofod said,” Friends and foes are being treated the same.” ” It’s ridiculous day”.
The difficulty
Trump’s supporters don’t simply agree with each other. Bessent is promoting a united before. However, another senior officials, like Commerce Secretary Howard Lutnick and Peter Navarro, are more focused on short-term producing victories and cash flow.
The important question is whether they begin making theatrical deals to benefit a particular company or whether they concentrate on making meaningful commitments to rebalance trade, according to Rethink Trade’s Lori Wallach.
Trump frequently struggles to use a single message in the White House. Yet administration officials in secret acknowledge that they are unsure of the president’s intentions at all times.
According to Doug Holtz-Eakin, a liberal economist and policy senior,” There’s no notion what they want from other countries, and worse is that other countries don’t understand what Trump wants from them.”
According to the WaPo record, industry envoys from various countries have spoken in secret and allegedly texted each other to compare notes in hopes of interpreting meaning from the chaos. Foreign diplomats frequently don’t also know which US standard to speak to.
The “grand annexation” may have a lower effect due to the tension.
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