U.S. President Donald J. Trump assumed office with an expressed desire to dramatically reshape American foreign policy and stop the world from ‘ripping us off.’ Halfway through his term, his foreign policy has upended much of the traditional bipartisan consensus on the importance of – and strength derived from – working with allies. The closest U.S. allies in Europe and in Asia have been thrown for a loop by Trump’s seeming indifference to the history of special bilateral relationships. Nowhere has this upheaval been more pronounced than with the deteriorated transatlantic relationships and with the new frostiness in ties with North American neighbours Canada and Mexico. By contrast, South Asia has been one region where Trump’s declared policies have hewed in great part to those of prior administrations, especially in the defence and strategic realms.

In 2017, the Donald J. Trump administration unveiled two new foreign policy frameworks in which South Asia featured centrally. One, the ‘South Asia Strategy’, laid out an approach to the long-running war in Afghanistan, taking into account the importance of Pakistan and India to success there. The second, the administration’s ‘Free and Open Indo-Pacific’ strategy, officially expanded the geographic scope of the Asian region to include India, and argued for a rules-based order in the region. Both of these strategies display strong continuity with those of previous U.S. administrations.

In trade and international economic policy, however, the Trump administration breaks sharply with traditional American approaches. Trump’s international economic fixation on reciprocity has unearthed tariffs from the farthest reaches of the U.S. policy toolbox, to the alarm of many. India, as the largest economy in South Asia by far, bears the brunt of the new American balance sheet approach to economic ties, and as a result, New Delhi has found itself caught in the crosshairs – even on trade matters which have figured little if at all in prior years. While the U.S.-India economic relationship has a long list of frictions at the best of times, the new Trump trade policies have introduced fresh stresses that run the risk of spilling over into other more positive aspects of the relationship.

When Trump announced his administration’s new ‘South Asia Strategy’ in a televised address at Fort Myer in August 2017, he presented three priorities: one, creating security and stability in Afghanistan to make space for a possible political negotiation; two, seeking greater cooperation from Pakistan and especially an end to the continued inaction on terrorist groups based on its soil; and three, an explicit role for India as a development and economic partner in Afghanistan. In some ways this strategy departed from the Afghanistan strategy of the Obama administration as presented in 2009 – but in other ways it proceeded in line with the regional evolution in the eight years that followed.

The Obama administration first increased the U.S. military presence in Afghanistan as well as economic and security assistance, noting that the United States had switched its focus to Iraq too soon after 9/11, and had therefore not done enough to make success possible. Over the course of the Obama administration’s eight years in office, the realization came slowly that success in Afghanistan would be a tough road given the lack of sustained effects even after the troop surge and assistance surge. Frustration with Pakistan mounted, notably with the discovery of Osama bin Laden a stone’s throw from a military academy in Abbottabad. A deeper appreciation dawned for the problems Pakistan’s ‘double game’ posed to success in the region. And an effort to begin political negotiations, including with the Taliban, ran aground.

 

By the end of the Obama administration, in late 2016, former Secretary of Defence Ash Carter was unable to certify to the U.S. Congress that Pakistan was taking sufficient action against the Haqqani network as required under U.S. law for continued access to the full level of coalition support funds. One-third of those funds were withheld as a result. A year later, Trump administration Secretary of Defence Jim Mattis was similarly unable to provide the same certification. By the time of Trump’s New Year’s Day 2018 ‘lies and deceit’ tweet, followed by the suspension of all security assistance to Pakistan, it marked a further ratcheting down of security assistance to the country. In other words, freezing security assistance to Pakistan looked more like a natural consequence of the direction U.S.-Pakistan ties had been heading, rather than an abrupt shift. Given that UN- and U.S.-designated terrorist groups continue to operate openly in Pakistan, it would be hard to imagine a Democratic administration reaching a dramatically different conclusion at this point.

At the time of this writing, the Trump administration had launched political negotiations with the Taliban directly, differing from the Obama administration’s principle of an ‘Afghan-owned, Afghan-led’ process. One result of the negotiations appears to be an increased reliance on Pakistan – even amidst the continued cessation of assistance to the country.

In seeking a larger role for India on economic and development assistance to Afghanistan, the Trump approach lines up with the Obama administration’s framing of regional economic connectivity as a requirement for long-term stability in Afghanistan. It was former Secretary of State Hillary Clinton who delivered the ‘New Silk Road’ vision speech – in Chennai – back in 2011. The idea of the ‘New Silk Road’ was that markets and enhanced regional links could play a crucial role in better embedding Afghanistan among its larger region, and providing Afghan producers access to the largest market in the region, India.

 

The Trump administration has taken the idea of India’s role as the regional economic vortex to heart. As a result, the Trump South Asia strategy explicitly seeks a larger economic role for India as a major donor (indeed, India has been the fifth largest bilateral donor to Afghanistan – and the largest regional donor – for many years now) and as a major commercial hub. The United States Agency for International Development (USAID) has invested in linking Afghan businesses to the Indian market via an ‘air bridge’, an export hub based at Kabul airport, as a way to work around Pakistan’s refusal to allow trucks to carry Afghan goods overland all the way to India via Pakistan. USAID has also supported the launch of an annual trade and investment fair, ‘Passage to Prosperity’, that brings Afghan producers and their wares to be showcased to Indian and other international buyers in India.

Finally, the Trump administration’s South Asia strategy does not elevate a focus on the continued tensions between India and Pakistan. The strategy does, however, emphatically and repeatedly focus on Pakistan’s responsibility to end the presence of terrorist groups on its soil – actions still lacking from Pakistan. So the onus is on Pakistan to end terrorism on its soil as a precursor, and indeed as a necessary step, toward regional stability.

 

The Trump administration also unfurled an approach to the larger Indian Ocean and Asia-Pacific that formally places greater emphasis, at least in its geographic scope, on India’s centrality to the strategic landscape. The Trump administration formalized its ‘free and open Indo-Pacific’ policy through numerous speeches, administration documents such as its National Security Strategy, and notably re-designated U.S. Pacific Command as U.S. Indo-Pacific Command in May 2018.

In many ways the ‘free and open Indo-Pacific’ policy reads like the pivot – or rebalance – to Asia policy of the Obama administration, unfurled beginning in 2011.¹ The Obama administration underscored the importance of Asia as the space where the future of the world would be written, a space where the United States would need to be more engaged, and a space that extended not only across the Pacific Rim but to its West across to the Indian Ocean. In the rebalance to Asia policy, India had an important role as a rising power with which the United States should develop stronger ties. Indeed, in January 2015 the United States and India released a ‘Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region.’ Its principles look very much like those of a ‘free and open Indo-Pacific.’

In the years since the rollout of the Obama era rebalance framework, the geopolitical trends to which it responded have only intensified. The most important factor has been China’s changed actions in the region. China dramatically escalated its territorial claims in the South China Sea; expanded its visibility across maritime South Asia and the Indian Ocean region; ramped up its infrastructure investments to smaller countries all around the region with its Belt and Road Initiative; provoked a 73-day long armed stand-off in 2017 with India on the Bhutan-China border; and increased its own use of technology, data, surveillance, and other efforts to interfere in the domestic politics of New Zealand and Australia. India’s own maritime ambitions, especially its goal of primacy in the Indian Ocean, therefore respond to China’s more assertive presence across maritime South Asia – not just since 2013 and the Belt and Road Initiative, but going back to the early 2000s.

 

Putting all this together, the geopolitical shift that drew New Delhi and Washington closer together some eighteen years earlier – meaning the rise of China and an interest in a regional balance of power, as noted specifically by former U.S. Ambassador to India Robert D. Blackwill – has only increased in its relevance and importance.²

Thus the Trump ‘Free and Open Indo-Pacific’ strategy appears to build on the evolution of U.S. engagement with India across Asia, and does so recognizing that New Delhi’s interests and ambitions particularly on maritime South Asia and Indian Ocean issues converge significantly with those of Washington. India has strengthened its defence capacity over the past fifteen years to such an extent that U.S. secretaries of defence now routinely refer to India as a ‘net provider of regional security.’ (In fact, India has scaled up its humanitarian assistance and disaster relief capacity and now possesses the largest heavy-lift air transport fleet outside of the U.S. after the acquisition of ten C-17s.)

That makes India an important and increasingly capable partner when thinking about the larger framework of Indo-Pacific strategy. The Trump administration’s specific ‘free and open Indo-Pacific’ priorities clearly carry over from the Obama administration, particularly the emphases on the rules-based international order, freedom of navigation, and open markets.

 

A new element has appeared with the emerging problem of ‘debt trap diplomacy’ resulting from China’s sustained use of higher interest loans in the Belt and Road infrastructure financing. The terms of these loans have proved so burdensome that recently some countries have exchanged long-term land lease agreements for debt relief. Closer dialogue with India on infrastructure finance – similar to the conversation between the United States, Japan, and Australia on infrastructure finance support – has come about as a natural result of the changed conversation on sovereignty in economic statecraft. This is a direct consequence of recent developments that have illustrated how vulnerable smaller economies can be to the lure of high interest infrastructure finance, even if the later result will require, as with the case of Sri Lanka and the Hambantota port, trading actual territory to shed debt.

That brings us to the ‘Quad’. The Trump administration has resuscitated the consultation between the United States, Australia, India and Japan, and formally called for more ‘quadrilateral consultation’ with these partners in its National Security Strategy. This Quad consultation met once informally in 2007 under the umbrella of the ‘Quadrilateral Security Dialogue’, and then never again until late 2017. It has now met three times since then.

The revival of the Quad thus represents continuity with a George W. Bush administration initiative that could not be sustained in subsequent years due to concerns from the other participants. Formal joint statements issued following the most recent series of consultations – notably led by foreign, not defence, ministries – refer to shared priorities of respect for sovereignty, international law, and sustainable development. Here again, the format, participants, and priorities carry forward those of prior U.S. administrations and serves to further embed the U.S.-India relationship within a cohort of like-minded democracies in Asia.

 

By contrast, the Trump administration’s approach to trade and international economic policy marks the most significant rupture with earlier U.S. policies, and the arena most substantially disrupting U.S. ties with South Asia. India, with a more than $2.6 trillion economy on its way to becoming the world’s fifth largest (International Monetary Fund estimates suggest that the Indian economy will overtake the UK’s in 2019), has been caught in the net of a variety of Trump trade policies unlike any other country in South Asia due to its economic heft.

The U.S.-India economic relationship is bumpy at the best of times, so it is not as if the Trump administration introduced problems into a friction free dialogue. What it has done, however, is pile newly created problems on top of an already lengthy list of economic differences that have proven difficult to resolve in the first place. This situation has been exacerbated by the president’s personal fixations on trade deficits and tariffs.

Shortly after coming to office in 2017, the administration developed a list of countries running the largest trade deficits with the United States. It turned out that India made that list, with around a $24 billion trade deficit in 2016. The trade deficit became a new area of negotiation, one in which U.S. trade negotiators pressed Indian negotiators for ways to reduce the deficit. By contrast, just a few years earlier, Obama administration officials often referred to the U.S.-India trade relationship in public remarks as ‘relatively balanced’.

 

Also in 2017, the Trump administration began an investigation of steel and aluminum imports on national security, known in the United States as a ‘232 investigation’ after the underlying legislation, Section 232 of the U.S. Trade Expansion Act (1962). Public hearings and international U.S. government deliberations on the 232 investigation stretched on into 2018. On 8 March 2018, the president determined in two separate proclamations that imports of steel and of aluminum negatively affected U.S. national security, and the remedy would be a 25 per cent tariff on steel imports and 10 per cent on aluminum imports.

This lengthy process affected Indian imports of steel and aluminum in the United States, as India did not receive a reprieve on the tariffs unlike neighbours Canada and Mexico, or Argentina and Australia, which sought special exemption. By late summer 2018, the Indian government had drawn up its own list of items on which to apply retaliatory tariffs of around $240 million dollars. As of December 2018, the Indian government had postponed application of the retaliatory tariffs several times, given ongoing U.S.-India discussions on the matter.

Also in 2018, the Trump administration decided to review India’s eligibility for duty-free imports to the U.S. through the ‘Generalized System of Preferences’. In November, the Trump administration withdrew GSP on a series of items for all countries, affecting around 50 products from India in the bargain.

 

On top of that, the Trump administration’s withdrawal from the Joint Comprehensive Plan of Action (the Iran deal) meant that U.S. economic sanctions kicked in on major transactions involving Iran, including on oil and gas procurement. India as a matter of principle follows UN sanctions authorities, and does not see ‘unilateral’ sanctions such as the U.S. economic sanctions, as having legitimacy. That said, the reimposition of the U.S. sanctions on Iran began again in November 2018, and India received a six-month ‘significant reduction exemption’ given its much reduced procurements from Iran. But the fact of having to revisit the issue of sanctions on a six-month basis will keep this on the frictions list for the future. (By contrast, Russia related sanctions, which indeed represent another friction in the U.S.-India economic relationship, stem from bipartisan concerns on Capitol Hill about Russia’s egregious international behaviour, and therefore does not reflect either change or continuity in the Trump approach to South Asia.)

While these new trade frictions emerged through larger U.S. administration investigations, President Trump has used his megaphone to add to the economic irritants by repeatedly focusing on the issue of tariffs on Harley-Davidson motorcycle imports to India, highlighting India’s Harley tariffs publicly on a number of occasions, to the puzzlement of many given the relatively limited Harley-Davidson exports to India. India should certainly lower its tariffs on Harleys, but this is hardly the most important trade issue in the relationship.

All of the above add up to a heightened sense of tension on the economic front, even leaving aside the long-standing and still unresolved agenda many current and former U.S. government officials would be familiar with: concerns about intellectual property rights, medical devices, foreign investment caps and restrictions, digital economy concerns, arbitrary tax policies; and on the Indian side, concerns about the U.S. high-skilled worker immigration system. The frictions that have been there in the economic relationship remain, but the Trump administration has upped the ante with a slate of new evaluations designed to make trade more ‘fair’ and ‘reciprocal’, to use the administration’s terms.

 

So to the question of continuity versus change in U.S. relations with South Asia, the Trump administration has laid out policies for South Asia and the Indo-Pacific that display great continuity with previous American approaches – unlike the big disruptions in approaches that more deeply embedded relationships, like those with historic allies, have experienced. In this sense South Asia has been a region of relatively bipartisan American consensus, if looking at the defence and strategic side of things. The trade and economic arena, by contrast, has been shaken up and shows no signs of settling down. The risk, of course, lies in the uncertainty that further arbitrary Trump administration actions on the trade and economic front could pose for bilateral or regional priorities on the strategic and defence fronts. That would be an unfortunate, but sadly not unimaginable, outcome.

 

Footnotes:

1. See the essay by former U.S. Secretary of State Hillary Clinton for an early articulation of the rebalance. Hillary Clinton, ‘America’s Pacific Century’, Foreign Policy, 11 October 2011. Via https://foreignpolicy. com/2011/10/11/americas-pacific-century/

2. See Robert D. Blackwill, ‘The Future of U.S.-India Relations’, edited version of a speech delivered in New Delhi on 5 May 2009. Available via https://www.rand.org/blog/2009/05/the-future-of-us-india-relations.html