Editorial: When the mad king blinks

After taking global trade to the brink of a catastrophe, US President Donald Trump announced late Wednesday night, April 9, a 90-day pause in the sweeping reciprocal tariffs he had imposed a week earlier. For the time being, tariffs for all countries bar China have been pared down to a blanket 10 per cent. This is still considerable, but for India, this is an opportunity to finetune its negotiating position in the ongoing trade talks with the US.

The tariff rollout and pullback of the past 10 days, the second instance of such second thoughts, offers some insights into Trump’s tactics. To the Indian government, the most useful of these insights is that the Mad King will blink, despite his bravado and braggadocio. While his aides are assuring us that this was all a play from this clever book, The Art of the Deal, the fact is that the President gave in to multiple points of pressure.

Firstly, there was the 14-trillion-dollar loss of value in the US capital markets, with even safe-haven bond yields rising to near-meltdown levels. Secondly, while the American people, by and large, kept their composure, it was the billionaires around Trump that panicked and turned upon each other, with Elon Musk publicly calling tariff adviser Peter Navarro a “moron”. Third, CEOs and economists universally said the tariffs would not lead to a revival of 1950s-style manufacturing in America.

Of course, the tariff fever could afflict Trump again in 90 days. But there is a strong likelihood that he will be an attenuated virulence by then, not quite the gangsta who said, just a day before he crumbled, that leaders of 75 countries were eager to kiss his rear. So, as one of those countries trying to appease the American President, India can use the interregnum to grow a spine.

Even before Trump announced his tariffs, India had struck a timid posture by lowering barriers on 35 US products, including Harley-Davidsons, Californian almonds, medical devices and data centre equipment. While give and take on such goods is fair game, it is American pressure on four critical fronts that India needs to stand up to. These are agriculture, intellectual property rights, defence procurement and energy dependence.

On agriculture, Washington wants unrestricted market access for US produce without considering that subsidies given to American farmers are vastly larger than any sops afforded to Indian farmers. On IPR, the Trump administration seeks to extend US patent laws to India while bypassing local compulsory licensing norms. This could endanger India’s generic drug industry. On defence, the US wants to lock India into buying American hardware without insisting on the proviso of local production that other suppliers like Russia offer us. On energy, Trump wants long-term contracts for the purchase of US crude and LNG, which would deepen our dollar dependency and curtail options of price bargaining with other suppliers.

Negotiations with the Americans in these sectors must be disclosed to the people because they have strategic implications. Caving in on agriculture could devastate India's 120 million small farmers and destabilize rural food systems. Giving in on IPR would make cancer drugs, insulin, and HIV treatments much costlier. Buying more US arms without tech transfer would worsen strategic dependence and shrink our still-nascent indigenous capacity. Since the implications are so vital, it is imperative for the Narendra Modi government to stiffen its back and take the nation into confidence during this interregnum.