As global outrage over Donald Trump’s tariff policy mounts, it may be time to look at the Narendra Modi experience.
If you listen to American and British commentators, you will think that Trump’s actions have only one recent parallel: the disastrous decision by former UK Prime Minister Liz Truss to overhaul the British economy by introducing a slew of unprecedented measures, including massive tax cuts. Truss’ policies were widely derided, and she was driven from office—becoming the shortest–serving UK prime minister in history.
Trump’s critics like this comparison because it illustrates the dangers of radically tampering with an economic system that has stood the test of time. Just as Truss faced disaster, many experts and political commentators argue that Trump, too, will soon be forced to reverse course as the consequences of his policies overtake his current popularity.
Well, yes, maybe.
Certainly, no American president has ever attempted anything this radical in the face of opposition from nearly every serious economist.
But there is another parallel—one that Americans may be less familiar with, but that we know in India only too well: Narendra Modi and demonetisation.
Modi and Trump—too many commonalities
The parallels between Modi and Trump have often been favourably highlighted, frequently by the Prime Minister’s supporters. From the very start of Trump’s first term, he has been a hero to many BJP loyalists, who speak with pride about the friendship between the US President and Modi. Even Trump’s decision to deport illegal Indian immigrants in chains has not dented the BJP’s fervour for him. And now, despite the damaging impact his tariffs are likely to have on the Indian economy, the love fest continues. The party line is: sure, maybe they will hurt us, but they will hurt other countries more.So hurrah for Donald!
There are deeper, more significant parallels. Both men are outsiders who have become villains in the liberal narrative. Both rely, to varying degrees, on identity politics. Both have been written off repeatedly, only to bounce back stronger. Both are more popular than their parties. Both demand—and receive—total loyalty and unquestioning obedience from their supporters. Both have dismissed the traditional media as dishonest and biased. And both believe they were elected not just to govern, but to transform.
By and large, both have achieved what they set out to do. The India of 2013 now feels like a distant memory—nothing like the post–Modi India we see today. In the US, Trump has rewritten the rules so comprehensively that he was able to challenge the results of a presidential election without any evidence—and treat those who violently ransacked the US Capitol on 6 January 2021 as heroes standing up for liberty and justice. Over the past month, he has targeted any prosecutor who dared hold those attackers accountable.
There is more. Both men are masters of grievance politics. Modi has told audiences they no longer need to be ashamed of India, arguing that the country he took charge of was a corrupt, scam-ridden mess. He claims to have cleaned it up, so that Indians, once again, can be proud of their country.
‘Drain the swamp’ was one of Trump’s slogans, but it could easily be used to sum up Modi’s appeal in 2014. Trump has gone further, telling Americans that their country has been pushed around for too long by other nations. They drain America’s resources by demanding security protection while making it difficult for the US to sell goods in their countries, he says. No wonder, he argues, that American manufacturing is in crisis, jobs are being lost, and the US has a huge trade deficit.
When you make such huge claims, you need to do something equally huge once you are elected, to demonstrate how you are changing things.
For Trump, tariffs are his way of saying that America will not be pushed around any longer. There is a certain logic to his actions. He wants to destroy the current world economic order and specifically stall the rise of China. Hence the latest pause on the implementation of tariffs on the rest of the world with the exception of China.
He hopes to effectively devalue the dollar and make US exports more competitive while reducing the real dollar-denominated wealth of countries like China (the largest holder of dollars outside the US) and crippling their export-led economies. In the process, the US manufacturing will be revived, jobs will be created, and America will gain. And the rise of China will be halted.
It doesn’t sound so bad in theory. But then neither did demonetisation.
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Demonetisation disaster—not for Modi
The argument for demonetisation was not a new one and it sounded simple enough. Too much wealth was held illegally in cash, Modi said. Suppose all that cash was made worthless in one single stroke? Honest people would not suffer because banks would accept their cash: the only requirement was that you explain how the money was earned. Crooks who could not offer legitimate explanations would find their pile of cash becoming worthless and black money would be severely reduced, if not completely eliminated. It was the best way of cleaning up a scam-ridden country.
We all know now that demonetisation—PM Modi’s 8 pm announcement on 8 November 2016—did not work. Not only did it hurt honest citizens and damage the Indian economy, but it made no real difference to black money: levels of cash in the system are even higher today than they were before demonetisation.
But here’s the thing: even in the short term, it made no real difference to Modi’s popularity. He went on to win the next two general elections and is still a popular prime minister nearly a decade later. Modi’s supporters accept that demonetisation failed but they don’t hold it against him. Instead, they see it as proof that he was willing to do something radical and unprecedented to change the system.
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Like Modi, Trump has little to lose
If the world’s economists are right, then Trump’s tariff policy will end up being a bigger disaster for the US than Modi’s demonetisation was for India. It will also severely damage the global economy.
And even if Trump is right, there will be months and months of suffering for Americans as prices rise and any increase in manufacturing will take a long time to show up. Trump says he knows this. His advisers say that a mild recession (which now seems inevitable) is the price America will pay for resetting the global order.
The consensus among Trump’s critics is that, as the pain mounts, the administration’s popularity will plummet and Republicans will begin losing Congressional races. There will be so much pressure that Trump will be forced to reconsider and roll back parts of his policy.
That sounds reasonable enough. But Trump is not a reasonable man. Like Modi, he makes his own rules and makes the unthinkable seem entirely normal.
There is another factor. Demonetisation happened early in Modi’s term. Trump is a kind of lame duck president. Under the US Constitution, he cannot serve a third term. (Though even that may change; with Trump anything is possible). So he no longer needs to care about popularity. He needs to worry about his legacy.
Trump really has very little to lose. If the scheme fails (which it probably will), his supporters will say (like Modi’s after demonetisation) that at least he sincerely tried to do something radical.
If it does succeed, however, then he will go down in history as the man who transformed America’s place in the world. And then, even the Constitution will be his to amend.
Either way, Liz Truss is the wrong parallel. Look at Modi instead. Both Modi and Trump know how to confound expectations. And neither can ever be written off.
Vir Sanghvi is a print and television journalist, and talk show host. He tweets @virsanghvi. Views are personal.
(Edited by Aamaan Alam Khan)