Economic nationalism and India-US trade relations during the Modi-Trump years

ABSTRACT

While India and the United States’ relations on the strategic and political fronts improved during 2017–2020, trade relations between the two countries noticeably worsened. Ever since their relations began to improve in the 1990s, deep divisions have existed between the two on trade issues such as market access in goods and services, intellectual property rights, and industrial policy. Given the focus on their strategic relations, successive administrations sought to manage these economic differences without public escalation of conflicts. The Trump administration’s approach deviated from this practice. While it continued to use the multilateral trading system to resolve some conflicts, it also resorted to using public shaming, tariff escalations and withdrawal of concessions in its relations with India. Although the Modi administration’s trade policy was similarly nationalist, its response to US actions were cautious. Evidence from the Modi-Trump period (2017–2020) shows that while both nationalist leaders pursued protectionist policies, the power capabilities of the states they led and the level of mutual economic dependence shaped their actions, their choice of instruments, and their ability to compel change in the other’s policies.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

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³ Ibid.

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¹⁷ Chad P. Bown and Melina Kolb, “Trump’s Trade War Timeline: An Up-to-Date Guide,” Peterson Institute for International Economics, updated June 21, 2022, https://www.piie.com/sites/default/files/documents/trump-trade-war-timeline.pdf. Accessed October 31, 2022.

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²⁰ “Databank: India.” World Bank. 2022. https://data.worldbank.org/country/india. Accessed July 27, 2022. India’s average applied tariffs increased during 2010–2013. It was declining before it again started going up in 2018.

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²⁴ Chad P. Bown and Douglas Irwin, “Trump’s Assault on the Global Trading System: And Why Decoupling from China will Change Everything,” Foreign Affairs, 2019, 98(5): 125–36.

²⁵ Bown and Kolb, 2022.

²⁶ Ibid.

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²⁹ Shayerah Ilias Akhtar and Vivian C. Jones, “Trump Administration’s Proposed Removal of Generalized System of Preferences (GSP) Benefits for India and Turkey” March 15 2019, https://crsreports.congress.gov/product/pdf/IN/IN11075, accessed October 30, 2022.

³⁰ “USTR Announces New GSP Eligibility Reviews of India, Indonesia, and Kazakhstan.” United States Trade Representative, April 12, 2018. https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/april/ustr-announces-new-gsp-eligibility. Accessed July 29, 2022.

³¹ Bown 2019.

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³³ Bown 2019.

³⁴ Bown, 2019.

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³⁸ Elizabeth Roche, “New dialogue format to help shift India-US ties to a higher plane,” Mint, August 18, 2017, https://www.livemint.com/Politics/hrsSAywXTBqsuGD2uzn7TO/New-dialogue-format-to-help-shift-IndiaUS.html, accessed November 10, 2022.

³⁹ David J. Singer, “The Level-of-Analysis Problem in International Relations,” World Politics, 14, no. 1 (1961): 77–92.

⁴⁰ Bown and Irwin, 2019.

⁴¹ USTR, “Special 301 Review Public Hearing,” February 24, 2015, https://ustr.gov/sites/default/files/02242015-Special301.pdf. See The Alliance for Fair Trade with India, https://aftindia.org/about/ for a list of participating trade associations and sectors. Both accessed October 31, 2022.

⁴² Michael D. Shear and Miriam Jordan, “Trump Suspends Visas Allowing Hundreds of Thousands of Foreigners to work in the U.S.,” New York Times, July 22, 2020, https://www.nytimes.com/2020/06/22/us/politics/trump-h1b-work-visas.html, accessed October 31, 2022.

⁴³ Bown and Irwin, 202.1.

⁴⁴ “President Trump slams India on trade, says it imposes ‘high tariffs’ on American products.” Business Today, April 29, 2019. Accessed July 29, 2022.