New initiatives are planned for supply chains of critical minerals, advanced materials and pharmaceuticals and for the recovery of strategic minerals like lithium and rare earths
It must have been disconcerting for Prime Minister Narendra Modi to transit from the structured formality of the AI Action Summit in Paris, co-hosted by President Emmanuel Macron and him a day earlier, to the deliberately casual setting in Washington, at the Prime Minister’s first meeting with President Donald Trump in his second term, on Thursday, February 13.
It must have been quite a leap for Mr Modi from the warmth of Paris to chilly Washington. In Paris, everything went according to plan. Mr Modi’s inaugural speech was well received. He warmed up to the positive vibes and spoke exceedingly well, conveying maturity, vision and global concern, as is expected of a three-time Prime Minister of India.
Expectations were lifted that the good run would last into the event in Washington DC. Welcomed to Blair House (the super luxury guest house just opposite the White House reserved for visiting dignitaries), adorned with the national tricolour fluttering in the chilly wind, was a good beginning. The initial meetings went well, with Tulsi Gabbard, the first Hindu US director of national intelligence, and Elon Musk, the billionaire head of Tesla and Twitter, and head of new US agency DOGE, tasked with promoting efficiency in government, who is trying to reduce the $1 trillion US deficit by imposing spending cuts in the administration. However, India still views him as a tech icon first, though his services in cutting to size India’s much smaller fiscal deficit of $182 billion could be helpful too. But the good times ended there.
Discordant notes: Hours before the scheduled meeting, Mr Trump issued directives based on his January 20, 2025 America First Trade Policy Memorandum for a “Fair and Reciprocal Plan” to counter non-reciprocal trading arrangements by determining the equivalent of a reciprocal tariff for each foreign trading partner. This will take time to work through, but upends established global trading arrangements. It is also unclear whether it can swing the trade balance in favour of the United States. The intended makeover is broader and seeks to cost all unfair, discriminatory or extraterritorial taxes imposed on US businesses and nationals, including costs from non-tariff barriers or harmful acts, policies, or practices, including subsidies, administered exchange rates and burdensome regulatory requirements on US businesses operating overseas. Implementation is likely to take longer, though the initial assessment of the cost to America is to be completed in six months. India was specifically targeted as a “tariff king”, particularly for tariffs on import of agricultural goods, and Brazil on the import of Ethanol.
Foes and friends felled: In the first round of reciprocal tariffs, allies Mexico and Canada were targeted with additional tariffs of 25 per cent, but then reprieved till March 2025 as both countries made soothing noises. Potential opponent China was slapped with additional tariffs of 10 percent outright. Not to be outdone, China imposed a revenge tariff of 10 per cent on US goods and moved the World Trade Organisation against the unilateral imposition of restrictive tariffs. The move was more formal than real, since the WTO remains hamstrung by US intransigence about allowing the WTO process to function effectively.
US junks ‘woke’ policies: Preserving the dominance of the US dollar and the US financial market which backstops it, is centre-stage. President Trump threatens tariff action on any country aiming to sabotage the dominance of the dollar. Alongside is the practical realisation that business overseas needs to be done in the context of the host country. For example, the US Foreign Corrupt Practices Act 1977 constrains American companies from business practices in foreign markets which are not permissible in the US. A February 10, 2025 presidential directive has already ordered a review. It states: “Over-expansive and unpredictable FCPA enforcement against American citizens and businesses for routine business practices in other nations actively harms American economic competitiveness and, therefore, national security.” It directs the attorney-general to cease initiation of any new FCPA investigations or enforcement actions, barring exceptional cases, and review all existing FCPA investigations or enforcement actions.
Implication for developing nations: The “un-woking” of economic regulations makes sense in the context of India and other developing countries, where business practices differ from the US. On February 11, PTI reported that several US Congressmen have already written to the attorney-general against “questionable decisions” by the justice department, including entertaining a case against the Adani Group alleging that the group paid bribes of over $200 million to government officials in India in exchange for favourable terms for solar power contracts. The “appropriate action”, they felt, “would have been to defer the case to the Indian authorities” since no real injury had been caused to US interests and both the company and the officials are in India. This new direction in US policy of not overloading economic regulations with onerous responsibilities beyond those necessary to protect US interests aligns with Mr Trump’s sense of practicality, in not sacrificing US business interests to shore up good governance in other countries.
Slim specific initiatives: Importing more oil and natural gas is one of the US asks, which could reduce the trade imbalance, though this would depend on the new “drill, baby, drill” approach, creating a global production glut and lowering the price of oil. The import of larger volumes of liquified natural gas can be constrained by its high cost versus cheaper albeit, carbon intensive, coal. Until domestic electricity tariffs in India start reflecting costs, the commercial demand for LNG will remain muted.
Technology initiatives: Commercial cooperation in small modular reactors is proposed for India’s unmet demand for clean energy, though China and Russia are reported to be further ahead.
Joint development, production and transfer is proposed in artificial intelligence -- hopefully open-source, low-cost LLMs, high-capacity chips and green biotechnology.
New initiatives are planned for supply chains of critical minerals, advanced materials and pharmaceuticals and for the recovery of strategic minerals like lithium and rare earths.
Face-saver: The extradition of Tahawwur Rana, an alleged perpetrator of the 2008 Mumbai terrorist attack, assuages Indian ire at procedural delays. Whether it will come with a quid pro quo remains unclear.
In sum, there were more misses than hits, possibly because the meeting was awkwardly timed. In any case, the expectations were impossibly high, based on the “beautiful friendship” between the two leaders. Business and feelings rarely go happily together. Anything else is exceptional and is best left to good fortune and common sense.
The writer is a former IAS officer, governance and economic regulation expert and Distinguished Fellow, Chintan Research Foundation
