Economic nationalism and India-US trade relations during the Modi-Trump years

Abstract

ABSTRACT While India and the United States’ relations on the strategic and political fronts improved during 2017–2020, trade relations between the two countries noticeably worsened. Ever since their relations began to improve in the 1990s, deep divisions have existed between the two on trade issues such as market access in goods and services, intellectual property rights, and industrial policy. Given the focus on their strategic relations, successive administrations sought to manage these economic differences without public escalation of conflicts. The Trump administration’s approach deviated from this practice. While it continued to use the multilateral trading system to resolve some conflicts, it also resorted to using public shaming, tariff escalations and withdrawal of concessions in its relations with India. Although the Modi administration’s trade policy was similarly nationalist, its response to US actions were cautious. Evidence from the Modi-Trump period (2017–2020) shows that while both nationalist leaders pursued protectionist policies, the power capabilities of the states they led and the level of mutual economic dependence shaped their actions, their choice of instruments, and their ability to compel change in the other’s policies.