US President Donald Trump has hammered a friendly India for buying Russian oil, but spared rival China, another big buyer. He has withdrawn from trade talks with India, and may not attend the QUAD talks that India may host later this year. This has miffed Indian policy-makers. For the past few weeks, officials and commentators have engaged in speculating the reasons behind this arbitrary way of dealing with the two countries. It becomes confusing because the US considers China an enemy, which is capable of challenging its global hegemony.
Democratic India was an ally, at least till the huge tariffs. Not only do the two countries share values but Delhi acts as a counter-balance to assertive China in the Indo-Pacific region. Trump, nevertheless, imposed a punitive tariff on India. Why Trump wants to punish a friend like India but glosses over potential adversary, China, is a question that has been doing the rounds in India’s diplomatic circles.
When the US President was recently asked this question, he said, “It has only been eight hours.... You are going to see so many secondary sanctions.” Though he hinted that China might be punished with additional tariffs, he has refrained from moving in that direction. The 90-day reprieve he gave to China ends today. Trump is cautious towards China because the latter has many levers that it can use against the US. It can impose reciprocal tariffs, and muddy the waters before the crucial bilateral trade talks.
China wishes to retain its access to the US market. It is interested in a trade agreement with the US. But experts contend that the urgency in Washington is more than in Beijing. This is because the US is not China’s top trade partner. China gives more importance to ASEAN partners, its largest trade partner, and the European Union. The US trade accounts for 16 per cent of China’s trade. The total trade between the US and China was $758.4 billion, according to 2022 figures. This included $562.9 billion exports from China and $195.5 billion imports. Not trading with the US will hurt China but its economy will not collapse if it does not.
While trade with China constitutes 7.5 per cent of US exports, trade with it creates and supports a significant number of American jobs. Exports support over one million US jobs, and Chinese companies in the US employ over 160,000 workers, according to reports. China has the advantage of rare earths. Of the 17 rare earths in the periodic table, China has almost 100 per cent control over many. These are essential for automobile, electronics and defence industries.
The US can disrupt China’s petrochemical sector by denying it ethane. It can derail its civilian airline programme via controls on jet engine parts and other components. Hence, both nations have levers that they can use against each other.
But Trump is worried about local politics. His party faces a midterm election next year, and he does not want the Republicans to lose their majority in the US Congress. In such a scenario, Trump may become a lame duck president for the rest of his term. In contrast, although the Chinese President is answerable to the communist party and people, he does not fear a rival party taking over the leadership.
Ever since he was reelected, Trump decided on a course correction in the relations with China. Unlike Trump 1.0, when Sino-US relations were marred by trade and tech wars, Trump 2.0 was different. On the eve of the presidential inaugural, Trump had a phone conversation with Chinese President Xi Jinping. The two countries had a series of trade meetings, where they decided to bring down tariffs. The US decided on 30 per cent duties on Chinese goods, while China decided to reduce them to 10 per cent.
India does not have the same levers as China. India misread Trump in his 2.0 avatar. The presumption that the earlier bonhomie between Trump and Indian Prime Minister Narendra Modi will continue proved wrong. Hence, the initial decision to appease Trump did not last long, and India has decided to now stand firm in the wake of huge tariffs. Beijing prefers transactional Trump to his ideologically-driven predecessor Joe Biden. But Trump’s propensity to make a U-turn, as he did last time, continues to worry the Chinese leadership.
The author is a commentator, and has worked in senior editorial positions for leading Indian media houses