President-elect Donald Trump’s announcement of steep tariff hikes on imports from Mexico, Canada, and China has the global trade community on edge. But while this move targets major trade partners, one nation notably escaped the list: India. It’s a curious omission, especially since India’s trade with the U.S. is robust, with $82.9 billion in exports in 2022 alone. So why has India been spared, and what does it tell us about Trump’s geopolitical playbook?
India and the U.S.: A Growing Trade Relationship
India is no small player when it comes to trade with the United States. From diamonds to pharmaceuticals to refined petroleum, India’s exports have surged over the years. At the same time, India is also a key market for U.S. goods, importing crude oil, coal, and even American diamonds. This trade relationship is growing stronger, and the numbers reflect mutual benefit rather than strain.
Geopolitics at Play: Why Tariffs on India Don’t Make Sense
India’s exclusion from Trump’s tariff list isn’t just a coincidence—it’s a calculated decision rooted in geopolitics. Here’s why:
- Strategic Partnership: The U.S. sees India as a critical ally in the Indo-Pacific region, especially as both nations share concerns about China’s growing influence. A trade war with India could strain this budding partnership, something neither side can afford.
- Manufacturing Shift: As companies look to diversify their supply chains and reduce dependence on China, India has become an attractive alternative. Apple, for example, now manufactures 14% of its iPhones in India. Imposing tariffs could deter this promising shift.
- Balanced Trade: While the U.S. does have a trade deficit with India, it’s nowhere near the scale of its deficits with China or Mexico. India has also shown a willingness to negotiate on market access for American businesses, creating a more cooperative dynamic.
- Diplomatic Ties: Trump and Indian Prime Minister Narendra Modi have maintained a cordial relationship. Their rapport plays a subtle but significant role in trade decisions.
The Elon Musk Factor: Tesla, Telecom, and Trump
There’s another intriguing layer to this story—Elon Musk. Tesla has been trying to enter the Indian market for years, but regulatory challenges and India’s push for local manufacturing have slowed progress. Musk’s other venture, SpaceX, is eyeing India for its Starlink satellite internet services.
Now here’s where it gets interesting: Musk has been a vocal supporter of Trump. Could Trump use his influence to nudge India into opening its markets further for Musk’s ventures? It’s not out of the question. If Tesla and Starlink gain a stronger foothold in India, it could be a win-win for Musk and the U.S. economy, aligning with Trump’s “America First” philosophy.
India’s Independent Streak
But let’s not forget, India isn’t a passive player. The country has shown time and again that it won’t hesitate to protect its interests. Back in 2019, India imposed retaliatory tariffs on U.S. goods when faced with American tariffs on steel and aluminum. Even recently, India has pushed back against trade imbalances, showing it’s willing to stand its ground.
India values its strategic partnerships, but it also prides itself on being a geopolitical decision-maker that can chart its own course. If the U.S. pushes too hard, India could respond with higher tariffs or stricter market access, making it clear that it won’t trade sovereignty for concessions.
The Bigger Picture
Trump’s tariff strategy may be aimed at reshaping America’s trade relationships, but the decision to exclude India speaks volumes about its importance in the global balance of power. India’s growing economic clout, its role as a counterweight to China, and the potential for U.S. businesses to thrive there make it a country worth handling with care.
At the same time, India’s firm stance as an independent geopolitical actor ensures that any engagement with the U.S. will be on its own terms. The coming years will test this relationship, especially as figures like Musk enter the mix. One thing’s for sure: India’s role in this drama is just beginning to unfold.