US-India Trade Deal: Modi Diplomacy Shelters Indians From Big Tariff Fallout?

US President Donald Trump has been on a tax-imposing spree and has been slapping tariffs be it sectoral, reciprocal or sector-specific. But the Modi-Trump Camaraderie will to an extent ensure that India remains incubated amid global tensions of a potential trade war.

What Did Trump Say After The Bilateral Trade Meeting?

On Friday, Trump indicated at a likely trade deal between India and the US, while also praising PM Narendra Modi for being a 'good friend' and added that the deal is 'going to work out very well between India and US'.

Prime Minister Modi was here just recently, and we've always been very good friends. India is one of the highest tariffing nations in the world... They're very smart. He (PM Modi) is a very smart man and a great friend of mine. We had very good talks. I think it's going to work out very well between India and our country. And I want to say you have a great prime minister..." Trump said.

What Do Experts Say?

While there is no clarity on what the terms of reference (ToR) may be for the trade deal, financial expert Kishore Subramanian says that the answer is a yes and no for whether or not the India US camaraderie will dilute the impact of tariffs on India.

According to him, as far as international relations are concerned diplomacy does work but at the same time countries have their interests first, he said.

"For a person like Donald Trump it is always America first and for a person like Mr. Narendra Modi its going to be India first. So they are going to be at loggerheads when it comes to this," he added.

He further said that depending on the two leaders' friendship, camaraderie, inter-dependency in terms of trade, economics, manpower is going to dilute the impact of tariffs to an insignificantly small number because barring diplomacy, the actual tough talks happen on the table where the Republican leader has clearly suggested reciprocal tariffs.

"Mr. Trump is going to be extremely strict and stringent on that," Subramaninan added, the reason being that without the Indian manpower, especially the workers and immigrants going with H1-B visas to the US, the country is going to suffer.

He further said that "The cost of production and the cost of manufacturing and internalization of products and goods and services is going to be far costlier than importing. So yes, this is a deadlock. At the end of the day Indians understand that America is still the superpower, dollar is still the strongest currency and they will give some weightage to that."

India will give some leeway, in the hope that in a barter situation America too would give India some headway, he noted.

Also Read: US-India Trade Deal: PM Modi’s Friendship With Donald Trump To Make India A Sweet Spot Amid Tariffs?