Trump is a short-term irritant; overlapping Indo-US interests are a long-term reality

For all practical purposes it’s underway. The nominal global GDP in 2024 was $111.3 trillion, with the US contributing about 26%. China contributed about 16%. These two economies are way ahead of the rest in terms of size, and China has a reached a scale where it is a genuine strategic competitor to the US.

Unlike the first Cold War, India shares an unsettled border with the newest superpower and has been in armed conflict with it. Moreover, there’s no common meeting ground right now between the two countries on a mutually acceptable border.

This factor outweighs all the unpleasantness and whimsicality that Trump represents. Trump has limited time in office, while India’s problems with China have spanned generations, with no resolution in sight.

An outcome of this reality is that no Indian government will abandon strategic patience in dealing with a difficult US government.

Geo-economic fragmentation has begun

A chronological history of globalization since the 19th century shows that the first wave (1870-1914) and the last one (1990-2008) were the most far reaching. A common factor in these two phases is that it was a unipolar moment- there were other powers but just one could be called dominant.

The U.K in the first wave and the US in the second wave championed globalisation and set its terms.

The highlight of the last wave, which saw the US as the dominant power, was the unbundling of production processes and establishment of global supply chains. Ironically, it helped China rise as a challenger to the US

Right now, after the phase of hyperglobalisation (1990-2008) we are in the midst of geo-economic fragmentation. Geo-economic fragmentation refers to policy-driven changes in the source and destination in cross-border flows, both merchandise and capital. This is achieved through export restrictions and tariffs, among other things.

Export controls and tariffs between China and the US are driven mainly by geo-economic fragmentation, rather than misplaced angst over trade deficits.

There’s a clear fault line between the US and China which will only widen from hereon.

The commercial logic that underpinned the advent of global supply chains in the last wave of globalization will however stay. Costs matter and even the US will not tolerate the price of a MAGA version of autarky.

American corporations have a vested interest in moving out of China but not re-shoring the way Trump wants them to. They may have promised to invest in the US, as Apple did with a commitment to invest $600 billion in the US over the next four years. But it’s not rediscovery of patriotic roots. They are, like Apple, extracting carve-outs from tariffs.

The commercial logic of the last wave of globalisation remains relevant and will keep India relevant for de-risking Western corporations, provided we do what’s necessary to equip our economy and workforce to meet the needs of a rapidly changing economic environment.

The China+1 strategy will eventually become India, Vietnam etc. but no China. That is the inexorable logic of both commercial interests and superpower rivalry.

The current phase is fleeting but not irrelevant

Trump is at the vanguard of a political movement in the US There’s no reason to believe that some of his ideas on tariffs will not leave a lasting impact on future American governments.

It’s unlikely that India’s political and strategic establishments will get over the shock treatment of the last few months, even if there’s belated acknowledgement that many chose to embrace wilful blindness.

That aside, the driving force of future engagement will be the threat posed by China, both in geopolitical and commercial terms. That’s where both India and the US have overlapping interests, which will determine long-term engagement.

Don’t expect an immediate rapprochement but never underestimate the binding power of mutual self-interest.