Last year, against USA’s imposition of high tariff on steel and aluminum, India stoke a voice of retaliation by proposing high tariffs on 28 items of imports from USA with a notification on June 2, 2018. However, the actual implementation did not take place and was deferred several times over a period of one year hoping that a resolve would be made through negotiations. The trade row heightened further with the abrogation of GSP. India responded with retaliation by imposing high tariff on 28 items of imports from USA on June 15, 2019.

The jumble of actions for retaliations and counter actions raised the ante of a grim situation between the two countries. So much so that Trump jeered at India for imposing high tariff and tweeted the hike as “Unacceptable” two days before the summit.

Nevertheless, his animosity quelled when both leaders met for discussion on the sideline of G-20 summit and called for a temporary truce. Both agreed for readjustment of tariffs at the official level through dialogue. Mr Trump refrained from pressing for withdrawal of high tariff.

This demonstrated Trump’s toned- down anger , which might have been influenced by Modi’s persuasive ventilation of India’s stand point .To this end , comments by Ms. Ivanka Trump, White House Adviser and daughter of Trump, carried an weight. She exulted the dialogue “productive”, even though she believed “India a critical ally”.

On the case banning of Huawei 5G technology, India remained non-committed to toe the line of USA. India pursued USA the need for 5G Technology for the country. According to Foreign Secretary Vijay Ghokle, Mr Modi might have convinced Trump that 5G Technology is need of the hour. This sent a message that India resisted Trump’s pressure tactic.

On sanction against oil purchase from Iran, Mr Modi seemed to have asserted for stability in gulf region, on the behest of its energy concern. India largely depends on imported crude oil (roughly 90 per cent) and Iran is a big supplier. It, accounts for 10 per cent of the total crude oil import. Besides, Chabbar Port engages Iran a strategic partner for India’s transshipment of goods to Central Asia. It helped the country by-passing troubled trodden Pakistan and Afghanistan. According to Mr. Vijay Ghokle, Trump told Modi that USA was trying its best to ensure stability in the region. This re-affirms Trump’s vying Modi’s friendship by toeing on India’s request for stability in the region.

Another surprise from the summit meet was that Trump did not raise the issue on purchase of S-400 from Russia (anti-aircraft missiles), even though concerns loomed large after India rejected US Secretary of State Mike Pompeo’ veiled threat during the meeting with Indian Foreign Minister S. Jaishankar.

In the post summit, both Mr Modi and Mr Trump were exuberant over the success of talks. Mr Modi tweeted “we discussed ways to leverage the power of technology, improve defence and security ties as well as issues relating to trade. India stands committed to further deepen economic and cultural relation with USA”. An impression unleashed by India’s Foreign Secretary Vijay Ghokle, was that the bullying tactic by Trump did not work on Modi. Echoing similar impression, Trump said “We have become great friends and our countries have never been closer. I can say with surety. We will work together in many ways including military”

Therefore, as against Trump’s tweet of bullying on India’s hike in tariff before the meet, the talks in the summit set a tone for resolving the issues through dialogues instead of retaliation, demonstrate that dialogue turned a game changer for US- India relation.

White House tweeted “Meeting just concluded. President @realDonald Trump and Prime Minister @Narendra Modi of India shared ideas to reduce America’s trade deficit, enhance defence cooperation and safeguard peace and stability throughout Indian Ocean and Pacific Region”

In global power game, India is far behind of USA. It is more significant to India economically in trade and investment and vice–versa. The USA is the biggest export destination for India and a major foreign investor. USA is the major turf for employment generation, since the USA is the biggest importer of labour intensive products from India. To this end, any retaliation by India warrants a major dent to its exports and economy.

From the point of national spirit, retaliation is a good challenge. But, national spirit cannot play pivotal role in cross-border trade, when the challengers are not on equal foot in terms of trade muscles.

USA accounts for 16 percent of India’s merchandise exports and 50 percent of IT software and BPO service exports. In contrast, India accounts for merely 2 percent of USA exports. Despite this, USA incurred trade deficit with India.

Trade deficit provoked Mr Trump to accuse countries for indulging in unfair trade practices. He alleged that while the exporting nations treated USA unfairly and reaped the benefits of American open and large market, these countries were reluctant to reciprocate by opening their own market on equal terms.

India will dig its own grave if it indulges in retaliation. Exports of readymade garments and gems and jewelry (particularly diamond and precious stones) are the cases in point. Both these items account for one-sixth of India’s total exports. And, USA is the biggest importer of these two items from India. Further, a big labour force is employed in these two export oriented industries. To this end, USA’s counter retaliation will send the industries in tailspin, causing huge export loss and unemployment.

Given the unbalanced power of two countries, Trump’s vying Modi’s heart to resolve the trade conflicts through dialogue should be treated a big success of G-20 summit at Kobe. (IPA Service)