There is little doubt that the world order is in a state of flux. The geopolitical uncertainties and rapidly shifting geo-economic dynamics are throwing new challenges, almost daily, if not hourly. At the fulcrum of this turn of events is the US President Donald Trump, whose tariff missiles and trade wars are threatening the balance of power structure in the region and pose several challenges for India.
Trump’s whirlwind tour of Asia includes bilateral meetings with the heads of four countries: Malaysia, Japan, South Korea, and China. His itinerary also includes two trade and economic institutions meetings: the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC) CEO luncheon meeting.
After Trump’s meeting, Japan pledged $ 550 billion in strategic investments in the US—mainly to get off the tariff hook of his administration. The US and Japan also shared a list of Japanese companies set to invest heavily in critical minerals, energy, and AI. For all the lavish praise Trump showered on Japan’s first woman prime minister, Sanae Takaichi, she promptly promised to nominate Trump for the Nobel Peace Prize. While Trump did bring the much-needed focus to ASEAN, he grabbed the opportunity to preside over a “peace deal” between Thailand and Cambodia, whose festering border dispute flared into open armed conflict in July—one more step, perhaps, toward that Nobel Peace Prize podium.
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What does this mean for India?
Trump’s trip could pose challenges for the Asian economy, and especially for India. Earlier, the US-China power contest was limited to bilateral trade with Trump’s use of tariffs as his main weapon. Now, the renewed engagement has brought the rivalry into the broader Asian arena. India already faces a tough and much powerful competitor in China across the immediate and extended neighbourhood. Trump’s presence at ASEAN, his meeting with Xi Jinping, and a potential US-favouring trade deal could pave the way for a new US-China axis, especially if Trump hints at a shift in America’s Taiwan policy.
Yet another challenge for India is the American interest in an air base in Afghanistan, rare earths and mineral wealth in Balochistan, and space for military bases in Southeast Asia. This would give the US a direct strategic footprint in Asia and reduce its dependence on vassal and satellite states. India’s “hastening slowly—focusing on infrastructure projects in Afghanistan—could secure it a foothold in the region. As in the West, India must engage with ASEAN and APEC in the East and Southeast with a much greater degree of seriousness and commitment.
By signing the initial framework agreement in 2003 and final agreement in 2009 to join the ASEAN–India Free Trade Area (AIFTA), India became part of the ASEAN-India Trade in Goods Agreement, opening doors to one of the world’s largest free trade agreement (FTA) markets with a population of about 1.8 billion people and an estimated combined GDP of about $ 3 trillion. A liberal tariff regime and greater market access, particularly for ‘special products’, could give India a much greater economic leverage in the region.
Besides trade, India is committed to ASEAN centrality, which underpins its Comprehensive Strategic Partnership with the bloc. This partnership is central to India’s Look East-Act East Policy (LEAE) and its economic and security architecture in the Indo-Pacific Region (IPR).
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The ASEAN access
We did not cover ourselves in glory by describing the ASEAN bloc as “B-team of China” and certifying our past trade agreement and approach as “silly”. Instead of accusing AIFTA of being a conduit for Chinese merchandise dumped in India, New Delhi should have increased trade with ASEAN, treating the bloc as a cooperative partner. Now, with India reopening its markets to Chinese products, where is the credibility in branding ASEAN as China’s B-team?
Skipping the ASEAN summit could weaken India’s ability to shape the region’s economic agenda. There may have been some legitimate apprehensions and strong logic to skip the ASEAN Summit, especially when Trump was attending it, which, like India, is only a dialogue partner, though with much higher stakes. At a time when India needs to negotiate on supply-chain resilience, digital trade, and investment security with ASEAN, a bloc crucial for maritime security dialogues and freedom of navigation, our absence could give China strategic space to influence discussions and trigger narratives that may not align with India’s interests in the region, the broader Indo-Pacific and its extended neighbourhood.
Nobody argues that we should not be concluding trade agreements with stronger economies like Australia, the EU, and the UK. But losing ASEAN to gain market access in the West and in the US will not be a very wise thing to do, to say the least. Minister of Commerce and Industry of India, Piyush Goyal, has indicated that ‘We don’t do deals with a gun to our head’.
New Delhi should tell the American trade negotiators that we have the strategic autonomy to trade with the US but not at the cost of our security, strategic footprints and our engagements with South-South Cooperation’s (SSC) economic and security architecture.
Seshadri Chari is the former editor of ‘Organiser’. He tweets @seshadrichari. Views are personal.
(Edited by Ratan Priya)