The Staring Contest, Trump’s Trade War, India’s Strategic Patience, and the Unfinished Business of the WTO
For months now, India has been engaged in intense trade negotiations with the United States—a subject close to the heart of K.M. Chandrasekhar, former Cabinet Secretary and India’s ambassador to the WTO in Geneva, whose accompanying analysis brings both historical depth and insider perspective to the recent interim agreement. The negotiations unfolded against the backdrop of a US president who declared, in an interview after his dramatic capture of Venezuelan President Nicolás Maduro, “I don’t need international law.” They followed a pattern established during Trump’s first term: withdrawal from the Trans-Pacific Partnership, invocation of rarely-used national security provisions to impose tariffs, and systematic sabotage of the WTO’s dispute settlement mechanism through blocking appointments to the appellate body.
In his second term, Trump came full-tilt at the rest of the world. Last April, he signed an executive order invoking the International Emergency Economic Powers Act, bypassing Congress to impose sweeping tariffs on all nations. The legality of this action is currently before the US Supreme Court. If the judgement goes against him, the US government would legally be required to refund these tariffs to American importers—a prospect that would have staggering fiscal implications.
India was a primary target. Trump first levied a 25 per cent tariff on all Indian goods, then added a 25 per cent penalty for buying Russian oil. The strategy was transparent: isolate India economically, force concessions, and pry open its markets for American agricultural and dairy products. Trump thought India would be an easy pick. Much to his surprise, India did not blink.
The accompanying analysis by Chandrasekhar offers a masterclass in strategic patience. While ignoring the provocations of Trump and his administration, India quietly opened official channels of negotiation. It subtly threatened the geopolitical balance by drawing closer to Russia and China. As the current president of BRICS, a growing bloc, India signalled its potential to form or join a parallel global economic system. Simultaneously, it negotiated trade deals with the UK, New Zealand, Oman, and the EU, blunting the impact of US hostility by securing favourable terms for labour-intensive industries like textiles and jewellery.
Economic reality eventually began to bite Trump at home. By the 2025-end holiday season, US consumers faced the impact of weaponised tariffs. Consumer electronics, often gifted in the season, rose 15-20 per cent in price. Forced by domestic pressure, Trump rolled back tariffs on agricultural and marine products, allowing sensitive Indian exports like shrimp and spices to regain markets. Reports suggest that the tariffs on steel and aluminium, raised in 2025, are also being rolled back.
The interim agreement that emerged is not a surrender; it is a testament to India’s negotiating skill. The US failed to gain access to Indian markets for its major agricultural and dairy products—a primary American objective that would have caused, in Chandrasekhar’s words, “the wholesale extinction of our peasantry had we buckled.” Instead, India gained comparative tariff advantages in key sectors like garments and jewellery. The commitment to progressively lower tariffs on high-end motorcycles, apples, American whiskey, and wines is a measured concession that may, in time, improve Indian products through competition. The “motherhood promise” to purchase $500 billion worth of US goods over the next decade is, given India’s burgeoning requirements in aviation, defence, technology, and energy, a natural trajectory rather than a forced concession.
Yet uncertainty persists. Trump can overturn agreements whimsically. The world must realise that no deal with the US is safe, underscoring the urgent need to re-establish the WTO’s rules-based trading system.
The Historical Context: From Cancún to the Trump Assault
Chandrasekhar’s account of his Geneva years, negotiating in the aftermath of the 2003 Cancún ministerial conference, provides essential context. The situation deteriorated after Cancún. Negotiations stagnated conference after conference. India, he acknowledges, must accept partial responsibility for this stalemate: “we were not sufficiently nimble in changing tracks when necessary, nor did we take the lead when opportunities arose.” The negotiations eventually ground to a halt—a standstill that was not in India’s favour.
This stagnation created the vacuum that Trump exploited. The WTO’s dispute settlement mechanism, once the crown jewel of the multilateral trading system, was rendered dysfunctional by the simple expedient of blocking appointments to the appellate body. Even if a member country wins a dispute, the loser cannot appeal, making enforcement impossible. The rules-based order that India had helped build, and within which it had learned to navigate, was systematically dismantled.
Trump’s assault went beyond the WTO. His withdrawal from the Trans-Pacific Partnership, a 12-nation bloc designed to promote trade rules, signalled that the United States would no longer lead efforts to shape global commerce. His invocation of Section 232 of the US Trade Expansion Act and Article XXI of GATT to impose tariffs on steel and aluminium on grounds of “national security” was a precedent-shattering abuse of provisions intended for exceptional circumstances. If every country can declare trade a national security issue, the very concept of predictable, rules-based trade collapses.
The Strategy: How India Navigated the Trump Onslaught
India’s response to this onslaught was a study in strategic patience. While Trump and his administration hurled provocations, India quietly opened official channels of negotiation. It did not take the bait; it did not engage in a public war of words; it simply continued to work toward a resolution.
The subtle threat of geopolitical realignment was a key element of this strategy. As president of BRICS, India signalled its potential to form or join a parallel global economic system. This was not an idle threat; the BRICS nations—Brazil, Russia, India, China, South Africa—represent a significant share of global GDP and population. A coordinated move away from dollar-denominated trade and Western-dominated institutions would have profound implications for the United States.
Simultaneously, India diversified its trade relationships. Deals with the UK, New Zealand, Oman, and the EU secured favourable terms for labour-intensive industries, reducing dependence on the US market. This diversification blunted the impact of US hostility and demonstrated that India had alternatives.
Economic reality eventually turned the tide. Trump’s tariffs hurt American consumers and businesses. By the 2025-end holiday season, the impact was undeniable. Consumer electronics prices had risen 15-20 per cent. Domestic pressure forced Trump to roll back tariffs on agricultural and marine products, restoring market access for Indian shrimp and spices. Reports of rollbacks on steel and aluminium tariffs followed.
The Agreement: Assessing the Outcome
The interim agreement that emerged must be assessed against the backdrop of this strategic context. Chandrasekhar’s assessment is clear: the US failed to gain access to Indian markets for its major agricultural and dairy products. This was the primary American objective, and it was defeated. Had India conceded, the consequences for its peasantry would have been catastrophic.
Instead, India gained comparative tariff advantages in key sectors like garments and jewellery. The commitment to progressively lower tariffs on high-end motorcycles, apples, American whiskey, and wines is a measured concession. These are products that do not threaten the livelihoods of millions of Indians. In time, competition may improve Indian products, as domestic manufacturers respond to the challenge.
The “motherhood promise” to purchase $500 billion worth of US goods over the next decade is, in Chandrasekhar’s view, a natural trajectory rather than a forced concession. India’s requirements in aviation, defence, technology, and energy are growing rapidly. Purchasing from the United States, the world’s largest economy, is not a sacrifice; it is a logical commercial decision.
The oil issue is more complex. Trump has claimed victory in stopping India’s purchase of Russian crude. The reality, Chandrasekhar suggests, is that Indian firms were already struggling to sustain purchases as sanctions hit harder. Moreover, with the world losing appetite for the Ukraine war even as Russia advances militarily, the strategic value of oil is shifting. The availability of heavy Venezuelan crude opens a viable alternative source for Indian refineries.
The Persistent Uncertainty: Why No Deal Is Safe
Despite the agreement, uncertainty persists. Trump’s temperament and negotiating style make any deal provisional. He can overturn agreements whimsically, as his history demonstrates. The world must realise that no deal with the US is safe.
This is not merely a problem for India; it is a problem for the entire global trading system. The United States, under Trump, has become an unreliable partner. Its commitments cannot be trusted; its agreements cannot be relied upon. This creates a toxic environment for business, investment, and economic planning.
The only durable solution is to rebuild the rules-based multilateral trading system. The WTO’s dispute settlement mechanism must be restored. The appellate body must be reconstituted. The principle that trade disputes should be resolved through law, not power, must be re-established. This will not be easy; it will require sustained effort from all major trading nations. But there is no alternative. A world in which the strongest can impose their will on the weakest is a world of perpetual conflict and instability.
Conclusion: The Lessons of the Staring Contest
The India-US trade negotiations of 2025-26 offer several lessons. First, strategic patience works. India did not blink when Trump escalated; it quietly pursued its interests through multiple channels and waited for economic reality to assert itself. Second, diversification reduces vulnerability. India’s simultaneous negotiations with the UK, EU, and others blunted the impact of US hostility and provided alternatives. Third, geopolitical signalling matters. India’s role as BRICS president and its outreach to Russia and China sent a clear message that it had options. Fourth, economic reality eventually bites. Trump’s tariffs hurt American consumers and businesses, generating domestic pressure that forced rollbacks.
But the most important lesson is that the rules-based trading system, for all its flaws, is worth defending. The WTO may be dysfunctional, but it embodies a principle that is essential to global prosperity: that trade should be governed by law, not power. The United States, under Trump, has abandoned this principle. It is up to other nations, including India, to defend it.
The interim agreement is a tactical victory, not a strategic settlement. The underlying conflict between Trump’s America and the rules-based order remains unresolved. The staring contest is over, but the war continues.
Q&A Section
Q1: How does K.M. Chandrasekhar characterise India’s role in the stagnation of WTO negotiations after the 2003 Cancún ministerial conference, and why is this acknowledgment significant?
A1: Chandrasekhar acknowledges that India must accept partial responsibility for the stalemate that followed Cancún. He notes that India was “not sufficiently nimble in changing tracks when necessary, nor did we take the lead when opportunities arose.” The negotiations eventually ground to a halt—a standstill that was not in India’s favour. This acknowledgment is significant for several reasons. First, it demonstrates intellectual honesty and strategic self-awareness. India’s negotiators recognise that their own rigidity contributed to the erosion of the multilateral trading system. Second, it provides context for the current crisis. The WTO’s dysfunction did not begin with Trump; it had been building for years, and India’s failure to adapt played a role. Third, it informs current strategy. The lessons of Cancún—the need for nimbleness, leadership, and adaptability—shaped India’s response to the Trump onslaught. By acknowledging past mistakes, India positioned itself to avoid repeating them.
Q2: What specific tactics did the Trump administration use to undermine the WTO, and why are these tactics so damaging to the rules-based trading system?
A2: Trump employed three specific tactics. First, he withdrew the US from the Trans-Pacific Partnership, a 12-nation bloc designed to promote trade rules, signalling that the US would no longer lead efforts to shape global commerce. Second, he invoked Section 232 of the US Trade Expansion Act and Article XXI of GATT to impose tariffs on steel and aluminium on grounds of “national security.” This was a precedent-shattering abuse of provisions intended for exceptional circumstances. If every country can declare trade a national security issue, the concept of predictable, rules-based trade collapses. Third, he blocked appointments to the WTO’s appellate body, rendering the dispute settlement mechanism dysfunctional. Even if a member country wins a dispute, the loser cannot appeal, making enforcement impossible. These tactics are damaging because they destroy the predictability and legal certainty that businesses and governments need to engage in international trade. They replace law with power, rules with whims. The WTO’s dispute settlement mechanism was the crown jewel of the multilateral system; its destruction leaves no neutral arbiter for trade conflicts.
Q3: How did India’s strategy of “strategic patience” work in practice, and what were its key elements?
A3: India’s strategy of strategic patience involved several key elements. First, ignoring provocations. While Trump and his administration hurled insults and threats, India did not engage in a public war of words. It quietly opened official channels of negotiation. Second, geopolitical signalling. As president of BRICS, India signalled its potential to form or join a parallel global economic system. This was not an idle threat; a coordinated BRICS move away from dollar-denominated trade would have profound implications for the US. Third, diversification. India simultaneously negotiated trade deals with the UK, New Zealand, Oman, and the EU, securing favourable terms for labour-intensive industries and reducing dependence on the US market. Fourth, waiting for economic reality. By the 2025-end holiday season, US consumers faced 15-20 per cent price increases on consumer electronics due to Trump’s tariffs. Domestic pressure forced Trump to roll back tariffs on agricultural and marine products. The strategy worked because it was patient, multifaceted, and grounded in a clear understanding of the economic forces at play. India did not need to defeat Trump; it needed to outlast him.
Q4: What is Chandrasekhar’s assessment of the interim trade agreement’s substantive terms, particularly regarding agriculture, dairy, and the $500 billion purchase commitment?
A4: Chandrasekhar’s assessment is notably positive. First, agriculture and dairy: the US failed to gain access to Indian markets for its major agricultural and dairy products—a primary American objective that would have caused “the wholesale extinction of our peasantry had we buckled.” This was a decisive defeat for US negotiating goals. Second, comparative advantages: India gained favourable tariff treatment in key sectors like garments and jewellery. Third, measured concessions: India agreed to progressively lower tariffs on high-end motorcycles, apples, American whiskey, and wines—products that do not threaten the livelihoods of millions of Indians. In time, competition may improve Indian products. Fourth, the $500 billion “motherhood promise”: Chandrasekhar argues this is a “natural trajectory rather than a forced concession” given India’s burgeoning requirements in aviation, defence, technology, and energy. Purchasing from the US is a logical commercial decision, not a sacrifice. Fifth, oil: Trump’s claim of victory in stopping Russian crude purchases is overstated; Indian firms were already struggling with sanctions, and alternative sources (like Venezuelan heavy crude) are emerging. The agreement, in Chandrasekhar’s view, reflects India’s negotiating skill and strategic patience, not surrender.
Q5: Why does Chandrasekhar argue that “no deal with the US is safe,” and what does this imply for the future of global trade governance?
A5: Chandrasekhar argues that no deal with the US is safe because Trump has demonstrated a consistent pattern of whimsically overturning agreements. His temperament, negotiating style, and disdain for international law make any commitment provisional. This creates a toxic environment for business, investment, and economic planning. The implication is that the world cannot rely on bilateral deals with the US as a stable foundation for global trade. The only durable solution is to rebuild the rules-based multilateral trading system. The WTO’s dispute settlement mechanism must be restored, the appellate body reconstituted, and the principle that trade disputes should be resolved through law rather than power re-established. This will require sustained effort from all major trading nations, but there is no alternative. A world in which the strongest can impose their will on the weakest is a world of perpetual conflict and instability. Chandrasekhar’s analysis underscores that the interim agreement is a tactical victory, not a strategic settlement. The underlying conflict between Trump’s America and the rules-based order remains unresolved, and the task of rebuilding that order is more urgent than ever.
