Donald Trump is at the Oval Office and the big question on India’s mind is how should it open up to an American president who mimicked an Indian call centre worker in one of his campaign speeches?
Trump, in most of his campaign speeches, has railed against outsourcing, and has vowed to right trade imbalances of the sort that India currently enjoys with the US.
But Trump couldn’t be all that bad for India, says former US diplomat William H AveryBSE 0.15 %. Infact, the billionaire could be more of a problem for China and Pakistan, he adds.
China and Pakistan, Avery says, have been using the US as a cash cow for decades: China by running a huge trade surplus ($366 billion in 2015); Pakistan by soaking up US aid (more than $30 billion since 2002), while pretending to fight radical Islam. All signs indicate that Trump would cut down on the flow of cash to both these countries.
The US has lost five million manufacturing jobs over the past 15 years, while China has seen rapid growth in its manufacturing sector over the same period. Trump is electorally committed to bringing a material number of lost manufacturing jobs back to the US; the only way he can do so will be to offset Asia’s (especially China’s) labour cost advantage in manufacturing with a combination of tariff and non-tariff barriers.
Such a move would come at the worst possible time for China, when a decades-long credit-fuelled investment boom may finally be turning to bust. For China, the potential outcomes of a trade war with the US range from sharply slower growth (best case scenario) to outright recession, which in turn could spark political unrest and, in a worst case scenario, revolution.
Would India lose some technology and outsourcing jobs if Trump Administration abandons US free trade policies? Perhaps, though it is harder to slap a tariff on a piece of code coming over the internet from Hyderabad than on a piece of machinery coming over the ocean from Shanghai. Regardless, in the zero-sum great game of Asian powers, China’s loss is India’s gain. And China stands to lose big under President Trump.
Bad news for Pakistan
India’s other troublesome neighbour, Avery says, is also set to be a big loser in a post-election shake-up of US relations in Asia. Trump has called Pakistan “probably the most dangerous [country]” and has said that “you have to get India involved; India is the check to Pakistan… I would start talking at that level very very quickly”. This statement is a sharp reversal of tone from presidential candidates toward India-Pakistan relationship. Just eigh ..
Since then, as president, he has avoided talk of mediation and stuck to the long-standing Washington script of simply encouraging the two sides to “improve their bilateral relations”. Now, however, the man who could be Obama’s successor is tossing out that script and saying, in effect, Pakistan is a problem, and India is part of the solution to that problem: a profound humiliation for Islamabad.