Fears of a full-blown trade war between the United States and India seem to have faded for the moment following last week’s meeting between President Donald Trump and Prime Minister Narendra Modi on the sidelines of the G-20 summit in Japan. Trump and Modi agreed to instruct their trade officials to meet soon to find solutions to an escalating row over tariffs that had triggered concern in both countries. It was a climbdown of sorts for Trump, who just a day before the Osaka meeting had taken to Twitter, as usual, to air his grievances. “India, for years having put very high Tariffs against the United States, just recently increased the Tariffs even further,” he wrote. “This is unacceptable and the Tariffs must be withdrawn!”
Following the G-20 meeting, the two sides will now move to the negotiating table to address the most contentious issues. This is a step forward, albeit a small one. It came on the heels of Secretary of State Mike Pompeo’s visit to New Delhi, where he held out the prospect of major U.S. investments in India. Trump followed that up in Osaka by promising India “very big things… in terms of trade, in terms of manufacturing”—without providing details.
Will the Modi government, grappling with a slowing Indian economy and keen to attract investment to revive it, take what some have called the Trump administration’s “bait” on trade and investment in return for opening up the huge Indian market to American goods?