Three months into his maverick second term, Trump seemed to be happily strengthening a strategic alliance, almost NATO-like, with the obvious objective of restraining China. Over a quarter century, we’ve conducted joint military exercises, launched satellites, made deep business-to-business investments, bought sophisticated weapons, and held celebratory political summits – just about everything to prove that Washington and New Delhi were going to be the closest buddies of the 21st century.
Trump, in his megaphone manner, appeared to have signed up for the bromance. Until April, there was remarkable optimism about doing a “big, beautiful” trade deal with India.
But then, India struck Pakistan hard in Operation Sindoor. Suddenly, inexplicably, Trump became vicious. He jabbed Modi in the eye by insisting, repeatedly, that he had virtually ordered India and Pakistan to cease fire. As Modi strenuously denied any American intervention, Trump began to serenade Pakistan, taking Field Marshal Asim Munir to lunch and promising to build a “big, beautiful” oilfield in a desolate economy.
To add insult to injury, Trump slapped the highest, most punitive tariff on us, calling our economy “dead”. Finally, in a surreal act of self-harm, he gave China/Pakistan a geo-economic advantage over India, America’s closest ally in the global effort to contain rogue nations.
Many Indians are feeling overwhelmed, anguished, at the Trumpian betrayal. A good friend broke out into this iconic song from the film Ankhen (Eyes, 1968):
Gairon pay karam, apno pay sitam,
Ae jaane-wafa, yeh zulm na kar,
Rehnay de abhi thoda sa bharam,
Ae jaane-wafa, yeh zulm na kar.
(You are being kind to strangers, but inflicting violence on your loved ones,
I am your loyal friend, don’t be so cruel to me,
At least keep alive the illusion of our friendship,
I am your loyal friend, don’t be so cruel to me.)
Group One: The Provoked Innocents
Trump’s unexpected assault on India has cleaved us into two groups.
There are the hot heads who are baying for “revenge”. They say, with aggressive innocence, that we should form a Russia-China-India “axis” to take on America who has “abandoned” India. I call this cohort “The Provoked Innocents”.
These provoked innocents thump chests when Reuters files an “exclusive” claiming India has paused all defence purchases from America – good show, sock it to the yanks! But they get disheartened when India promptly denies the Reuters report – oh no, shouldn’t we switch from American F-35s to Russian Sukhois, which are better aircraft?
They are excited that Modi got on a call with Putin, poking Trump by trumpeting India’s close, historic ties with Russia. They push for buying even bigger quantities of Russian oil – why not, if we can save millions of dollars, and show the middle finger to you-know-who?
These hot heads are delighted that Modi is going to China after seven years. By agreeing to attend the Shanghai Cooperation Organisation (SCO) Summit, India is showing the other hand’s middle finger to you-know-who. Let’s bait the Chinese with our huge market. Whisper in their ears not to worry; our appetite for your exports and investments can become bigger than what Trump has shut for you.
Unfortunately, it’s a naive and dangerous echo of 1962, of Hindi and Chini being brothers, i.e. bhai bhai.
Group Two: The Bide-Your-Timers
At the other end of the spectrum are people who advocate “strategic restraint”. The Trump regime is a transient aberration. Most likely, Trump will lose control of the House in the mid-term polls in November 2026. That could clip, even cripple, his political power. So, his bullying must be dealt with, tactfully, for just a few more months. I call this cohort, to which I belong, “The Bide-Your-Timers”.
After all, Trump has exempted almost half our exports, viz oil, pharma, and electronics. So that has whittled down the problem to about $40 billion in labour-intensive sectors like gems, jewellery, leather, garments, auto ancillaries, tyres etc. If we assume that 50 percent of these exports will get killed by the high tariffs, that’s a loss of $20 billion, which is a HUGE blow for individual companies, but a relatively small dent of less than 50 basis points for India’s GDP.
The real distress will occur at the household level. Workers in these industries, largely on contract, without a social security net, will get laid off, causing widespread misery to hundreds of thousands of families. The government must gear up to pro-actively marshal that situation.
Exporters should be aided, even subsidised, to find new markets and keep the shopfloor humming. Sacked workers should be actively assisted, with unemployment doles, re-training, and alternative job placements. It's going to be tough, but so was the pandemic. The Modi government will have to devise and implement a crisis response. There’s little room for self-doubt or prevarication or half-measures.
Modi must constantly remind himself that this is a bide-your-time strategy, to hold up long enough to ride over the pain until the end of Trump’s powerful reign. At best, it’s about 12 months; at worst, it’s three years!
Don’t Escalate Against America; Don’t Treat China as Pariah
Since the America-India strategic embrace will outlast Trump by several decades, Modi should not get trapped in an escalatory tit-for-tat.
We need to negotiate this rough phase with the least possible damage and provocation. We should have faith that the innate alliance will revive in the post-Trump era. Meanwhile, we should launch a vigorous drive to de-regulate, de-tax, and re-energise our entrepreneurial economy, giving it a much stronger second breath.
The final cornerstone of this bide-your-time strategy, ironically, must encompass China. We’ve got to stop treating China as a pariah country. We must draw them into an economic “entanglement” with India. Actively get Chinese companies to invest and set up high-tech shopfloor operations here.
That will kill two birds with one stone, i.e. reduce our imports and increase domestic capex, creating jobs within India versus draining forex to buy Chinese goods. And a third bird will get trapped too – once the Chinese are invested at scale in India, they will be forced to lower hostilities rather than risk those investments.
I am not saying marry or fall in love with the Chinese; but do begin dating them!