Trade policy on a wing and a prayer

United States President Donald Trump’s 9 July deadline passed without any fireworks — maybe he was busy threatening “anti-America” BRICS, of which India is a member. At the time of writing, neither side had commented on the current status of the India–US trade talks.

Past the 9 July deadline, India was to enter steeper tariff territory (26 per cent on exports to the US), but there was no confirmation of this from the US administration. Emails to the White House, Department of Commerce and Department of Trade went unanswered. Chances are the door for negotiations is still ajar.

On 7 July, while hosting Israeli Prime Minister Benjamin Netanyahu for dinner at the White House, Trump told reporters the US and India were close to an agreement. In a 6 July post on his social media platform Truth Social, he warned: ‘Any country aligning themselves with the anti-American policies of BRICS will be charged an additional 10 per cent tariff. There will be no exceptions to this policy.’

Brazil’s Lula shot back: ‘The world does not want an emperor who lashes out over the internet.’ South Africa’s Ramaphosa was more restrained: ‘The powerful should not seek vengeance against those working for good in the world.’ India remained timidly silent.

Trump thinks BRICS is planning to ditch the US dollar in bilateral trade. When Trump first raised the matter, India hastened to plead that it does not support de-dollarisation, even though it has local currency arrangements in some cases. Bloomberg reported on 9 July that Trump’s démarche added a new twist to the negotiations, which have been ongoing for months. But it is just as likely that Trump is bargaining hard with a wider pool of players, not specifically India.

CNN reported on 9 July, ‘India has long been viewed as the most likely major partner to sign onto a framework with the US. But Indian trade negotiators have hardened their positions in recent days, according to US officials.’

In late April, after his first 100 days in office, Trump falsely claimed he had completed trade deals with 200 countries. Nearly two-and-a-half months later, he has announced only three — with Britain, China and Vietnam. Realising perhaps that not all trading partners are cowed by his aggressive posture, he has effectively extended the negotiations, by sending out letters — apparently coercive but actually face-saving — to a number of countries, including Bangladesh and Sri Lanka, setting higher tariffs. Most of them have assessed Trump as more bark than bite — and are waiting for him to climb down.

The Narendra Modi government is among the few who haven’t had the courage to call Trump’s bluff. So, it has escaped his browbeating. But if India capitulates in the negotiations and grants American agricultural and dairy products unfettered access to the Indian market, it will be the death-knell for India’s still heavily agriculture-dependent population.

If Trump doesn’t relent on this, it will show what kind of priority he is willing to accord India — despite years of appeasement by Modi. In turn, it will affect Quad, the US–India–Japan–Australia partnership essentially created to contain China.

The Trump–Musk soap opera

Trump recently disclosed he didn’t like electric cars (which billionaire Elon Musk’s Tesla manufactures) and prefers the traditional oil-guzzlers. Buddies till the day before, their relationship has spiralled southward with astonishing speed.

Reading between the lines of a Trump statement, it seems Musk, while a ‘special employee’ of the US government and a close advisor to the President, was pushing for an ‘electric vehicle mandate’. Much to Musk’s chagrin, Trump’s ‘big, beautiful bill’ (now law) ended tax breaks for electric vehicles. “People are now allowed to buy whatever they want — gasoline-powered hybrids or new technologies as they come about — no more EV mandate,” Trump said.

Musk quite vocally opposed the legislation. He argued it would increase US national debt by trillions over Trump’s four-year term in the White House. He has now founded a new political party to oppose Trump.

Reacting to Musk’s proclamation of the America Party, Trump said, ‘I think it’s ridiculous to start a third party… I am saddened to watch Elon Musk go completely off the rails.’ He has even hinted at destroying Musk’s businesses and deporting him to South Africa.

Musk, the world’s richest man, clearly has the means to bankroll his party. Posting on his social media platform X, on 7 July, he said: ‘Backing a candidate for president is not out [of] the question, but the focus for the next 12 months is on the House [of Representatives] and the Senate.’ Musk owns X, which has 600 million active users, including over 50 million in the US.

He also cautioned ruling Republican lawmakers, who voted in favour of the bill, that they ‘will lose their (pre-nomination) primary (contest) next year if it is the last thing I do on this earth’.

The America Party may select a presidential candidate for 2028, but Musk cannot run, for he was born in Pretoria and, therefore, does not qualify.

UK–France entente cordiale

Europe does not keep you on tenterhooks the way Trump does. But the 27-nation European Union (EU) is a de facto United States of Europe, its gross domestic product (GDP) second only to the US, even after Britain’s exit from the EU. Trump says the EU is, “in many ways, nastier than China”.

The acrimony between the EU and Britain after the Brexit referendum of 2016 spelled disunity in Europe. The return of a Labour government in the UK has generated better vibes and a reset in ties, promising smoother trade. The Russian invasion of Ukraine has forged a bond, and the UK has taken the lead in creating a military ‘coalition of the willing’.

On 8–10 July, Britain hosted French President Emmanuel Macron, the first visit by a European Union head of state since the UK officially exited the confederation on 31 January 2020. Addressing a joint session of the UK parliament, Macron said, “We will never accept the theory that might is right. And I want to be clear, this is why, together with you, Mr Prime Minister (Keir Starmer), we decided to launch this coalition last February.”

He highlighted that Britain and France were Europe’s only two nuclear powers; “the leading armed forces of the continent” shouldering 40 per cent of Europe’s outlay on defence. Macron went on to affirm that European countries must end their “excessive dependency on both the US and China”, slamming China’s use of subsidies and Trump’s abuse of tariffs.

The Macron–Starmer chemistry has raised hopes of greater cooperation between the two countries to tackle asylum seekers who cross the English Channel from France to Britain. This has been a major political issue in the United Kingdom for years, which the previous Conservative government failed to remedy because of its fractious relationship with the EU, including France.

Ashis Ray can be found on X @ashiscray. More of his writing can be found here