Transcript: Why Trump’s Tariffs on India Are Part of a Wider Geopolitical Game: George Friedman

You can’t both be very closely integrated economically and hostile militarily. So we want to have closer relations with the Chinese. We need that, they need that. But they also need to know that we are prepared to ruptured those relationships.

But by taking India off the table as a possible military ally to the United States, that was the major gift to the Chinese. That’s not necessarily one that we will continue if the Chinese don’t respond properly. But at the same time, it signaled two ways and it was read two ways. The Russians read it as a demand and they didn’t respond very well. The Chinese have been somewhat quieter recently.

Why Not Target China or Turkey?

CHRISTIAN SMITH: Obviously, China and the US are sort of in the midst of a negotiation. They’ve reached a temporary accord after the tariff kind of escalation earlier this year. Why did Trump not put oil tariffs on China over Russian purchases? I mean, I think that Russia that China buys more Russian oil than India does. And then on the other hand, so do other countries. I mean, Turkey is a good example. They also buy Russian oil. Why not target them?

GEORGE FRIEDMAN: Well, Turkey is very important to us in the Middle East. So the point is that India is not critical to the United States. If we were going to do a demonstration, that was a nice country to do and. And we also have some issues with the Indians on various subjects. So if we were going to do a signal to both countries, Russia and China, it was worth doing this way.

CHRISTIAN SMITH: I mean, on that Ashok Malik, who I believe used to work for the Indian Department of Foreign affairs, wrote in the Financial Times last week that basically the oil tariffs aren’t really about Russian oil or anything. They’re about pressuring India into the broader trade agreement that the US wants. I mean, you mentioned other issues with India. Do you think that’s part of it as well?

GEORGE FRIEDMAN: It’s quite possibly part of it, but I think you have from American point of view, the U.S.-Chinese relations and the U.S.-Russian relations are the most dangerous and damaging. So if we also got the Indians to shift that would be just wonderful.

But on the other hand, we need to have a close economic relationship with China. We cannot tolerate a hostile military relationship with China. At the same time, we want the Russians to negotiate. And the only way we know how, aside from getting involved militarily, is to put pressure on them. Now, it hasn’t worked, but it was a low risk, high potential reward action.

India as a Strategic Tool

CHRISTIAN SMITH: And I mean, just to remind listeners that in recent years, you know, in the last few years, there have been several minor clashes on the border between India and China around the Himalayas. And so in that respect, you know, India has to spend a fair amount of resource stacking that border to make sure these things are kept under control.

GEORGE FRIEDMAN: I mean, the Indians of Pakistan was armed by the Chinese and went to war with India. So this has been a major issue.

CHRISTIAN SMITH: I mean, in that sense, I mean, the Indians may well feel like the US is now using it as a tool as it tries to reach deals with Russia and China. I mean, is that true? Are they being used as a tool?

GEORGE FRIEDMAN: Yes, I think so. And one of the problems with not having equal powers as Russia and China might have with the United States is that you might get used as a tool. This is in the nature of things.

Now, undoubtedly these tariffs will be stopped in due course. There will only be for a time. But at the same time, this is the problem of weaker nations trying to play games with very strong nations. They get used.

India’s Response and China’s Reaction

CHRISTIAN SMITH: Well, I mean, some of the consequences that have been pointed out of that already is that India’s quite rapidly gone to make better friends with China now. I mean, for the first time in about seven years, I think Modi Prime Minister Narendra Modi is going to be visiting China and meeting Xi Jinping. Should the US care that this kind of diplomatic friendliness has now popped up, that India and China may now be eager to kind of, you know, work together against the U.S. for example?

GEORGE FRIEDMAN: I think the message was, “we’re not after you.” The Chinese responded with better relations, and that’s just fine from our point of view. Something you have to understand, U.S.-Chinese relations that happened. The Taiwanese government announced a 20% increase in defense spending, something we wanted to have. The Chinese did not go crazy about it, nor have they, in response, as they frequently did, send ships to practice an embargo on Taiwan. None of these things have happened.

The Chinese response to what Taiwan did was very mild. And over the past few months, the Chinese have reduced to some extent the amount of naval exercises they carry out. So there’s many dimensions in the US-Chinese relationship. India is simply an example, a low cost example for the United States.

If we did this, we’re obviously not going to be going into an alliance with China, with India. And China dreaded that possibility because it would have threats from the sea and from land if that happened. So when you look at what the Chinese did in response was yes, the Indians increased their relationship with China, which didn’t prod the United States, but they also did not respond the way they normally do.

Remember, the Chinese are having deep economic problems, especially in their real estate sector. In China, owning real estate is like putting money in the bank. When the Chinese economic boom ended, it ended with a crisis in the real estate markets. Now they’re having another crisis, this kind of banking crisis.

They’ve been badly hurt, much more badly than the United States by the tariffs. The United States has also been hurt, but not that much. The Chinese need the United States very badly economically. The United States is prepared to have that relationship. The United States is not prepared to have that relationship while they’re trying to blockade Taiwan.

So the India move was a lever to some extent sacrificing relationships with India. But the Indians really can’t afford a confrontation with the United States. They may do one or two things, but we have that ability.

It did not work with the Russians. The Russians were not impressed, or at least not yet impressed by the possibility of putting sanctions on other countries to trade. But remember, if we’re willing to put sanctions on India, then certainly we’re willing to put sanctions on other countries. So it was a signal that with a significant power we are prepared to punish them for trading with Russia at the same time indicating to China that we’re not going to be in ally of India. You don’t have to fear us.

And so it was strategically, I think a good move. It didn’t work with Russia yet. Don’t know if it will, but certainly China has eased up a bit now. How long that will last, I don’t know. Other things has to happen.

America’s Strategic Objectives with China

CHRISTIAN SMITH: Well, India has. We’ll come on to this again in a minute, but India said, I think just around. We’re recording this on Monday 25th August and I think today or yesterday they were saying that they’re going to carry on buying Russian oil if it’s the best deal. We’ll come back to that in a minute.

But let’s just stick with China for the moment. You’ve started to touch on it there, George. Let’s dive a bit more into what America wants out of its relationship with China. Now that we obviously had these huge tariffs earlier this year, there’s obviously huge disagreement in the US and globally about whether or not the US and China are in a second Cold war, whether there’s this Thucydides trap idea, whether they’re doomed to conflict. After those tariffs and the idea that China is ripping off America. What do you think the government in the US wants with China now?

GEORGE FRIEDMAN: It wants, number one, for the Chinese to halt their aggressive moves on Taiwan, not only because they care about Taiwan, but they simply want the Chinese to be less aggressive. The fundamental interest of the United States with China is not going to war with China. That’s just, number one, the same imperative as there is with Russia. Do what we can, but don’t go to war.

The Chinese, in a way, have a weaker hand in the sense that their economy is their gold, their reputation is everything. But you have to remember that economy began to grow based on exports to the United States and investment from the United States. It’s very heavily tied into the United States in fundamental ways. The United States is also tied into China, and we have some pains, but we’re not fundamentally dependent economically.

So what we want from the Chinese is a lowering of their aggressive stance in the region. We don’t want a war with them. We’ll happily trade with them, but that’s our price. So far in Little show with Taiwan, they seem to have calmed down.

The Russian Equation and Economic Leverage

With Russia, we simply want to make it clear that we can do massively more damage to the economy than you already have by this war. So basically, even with the Russians, we want to have a different relationship. Trump has said that, and it’s logical. Russia is a very interesting country if it’s not at war. It has a large, sophisticated workforce. It has cheap land all over the place, many resources we could buy. There are hedge funds growing for investments in Russia.

So the Americans want at this point to lower the military confrontation on both sides and increase economic cooperation. So they look at China as if they were not pretending to be an aggressive power, which they are not really aggressive. They just do the act. And with Russia to say, “Look, you can have a lot to gain by stopping the war in Ukraine.”

So oddly enough, because you don’t think of Trump as necessarily a peacemaker, that’s what he’s trying to do with both of the countries. And the Indian move was a very small move in that direction, signaling one thing to the Russians. Another thing to Chinese.

The Risks of Unpredictable Diplomacy

CHRISTIAN SMITH: Well, given how much has happened in the eight months or so since, or seven months is it since Trump came back into office, it’s easy to foresee that we’ll forget about this quite quickly in a month’s. But more broadly, is there a risk to conducting diplomacy like this? I mean, Trump has made it central to his strategy of tying non trade issues with trade issues and tariffs and conducting diplomacy like that. He pulls one lever over here, even though typically you wouldn’t be expected to do that for something that’s happening over here. I mean, one of the risks may be, as you see with India here, that your friends or colleagues is the better word for India, they no longer trust you.

GEORGE FRIEDMAN: Well, trust is not a major term in international relations. Interest is we did not do these things with India before. We’ve had a non confrontational strategy toward China. We’ve not done anything particularly aggressive against China. China has on a number of occasions done some things aggressive against our allies. We’ve been defensive but passive in that.

So when you ask the question, what’s more important in the United States, a changed relationship with China, a changed attitude on the part of Russia or a relationship with India? If you have to ask the question, which is the most dangerous things in there? It’s Russia and China, which is least in that configuration? It’s India.

So if you can signal and then turn around and drop tariffs too, if it works, if you can just signal to the Russians that we will raise tariffs on anyone who trades with you and we’ll start with one of your biggest customers and the strongest, that’s helpful. Same with the Chinese side. If we signal that we are not going to go to war with you, that’s a good signal.

Strategic Unpredictability as Foreign Policy

In other words, when you are engaged in diplomacy or buying a house, there are two things you do. You act like you don’t want it and then you manipulate it until you can get your best price. Diplomacy is not necessarily best a consistent policy. Doing the unexpected. Sometimes when you’re carefully moderated, and this was carefully moderated, doing the unexpected and feeling the pressure is a possible way to reach an accommodation.

India was in this sense a victim, a minor, relatively minor cost to the Indians, certainly nothing to break relations over. On the other hand, it did signal to the Chinese that we’re not going to be going to war with them, which they worried about India and to the Russians that we really are going to impose tariffs. The most useless thing to do is say we’re going to really hurt you and never hurt them. The other thing not to say is, we’re going to attack you and then attack them. So in both cases, diplomacy consists both of having some advantages presented and some disadvantages, and this did both.

CHRISTIAN SMITH: What do you say to those who use the term TACO? Trump always chickens out. I mean, these sanctions at the moment look like they’re going ahead on India as of time of recording. But Putin seems to be asking for more and more, but he’s still quite desperate. Do you think that Trump is TACO or is that the right verb? I don’t even know. Does he always chicken out?

GEORGE FRIEDMAN: The most powerful nation should be the most unpredictable. In other words, we ran the Cold War with a high degree of predictability. If the Russians did this, we would do that. If the Russians launched nuclear attack, we would respond. If the Russians went into communists, went into South Vietnam, we would go there. We had a highly predictable policy, and the world liked that. The world liked that sort of predictability. On the other hand, it didn’t necessarily benefit us to be so predictable. We constantly allowed the other side to determine what we were going to do.

So Trump, whatever you think of him personally or ideologically or anything else like that, has introduced a very valuable dimension to U.S. foreign policy. Unpredictability. In fact, none of these were unpredictable. It was not unpredictable that we did not want Russia to continue the war in Ukraine. We had negotiated with them, they refused to do so. We did something that they thought they wouldn’t, we wouldn’t do.

As with the Chinese, we had a different thing. They wanted to understand that we were not trying to use India as the back door to attack them. We showed that if you have a foreign policy that is so predictable that enemies or friends can know how to manipulate, you know, how you respond to this or that. Well, for a lot of people, that’s reliable. Excessive reliability in foreign policy is not necessarily the best way to go. You want the other guy to be guessing. Is it risky? It’s very risky to be predictable. There’s always risk of foreign policy. So in this case, he’s produced a level of unpredictability, including when he makes a threat he may not carry out. He may, you don’t know, let the other guy worry.

Will the Tariff Strategy Work?

CHRISTIAN SMITH: Interesting. Will they work? Will these tariffs work?

GEORGE FRIEDMAN: Well, if they don’t, what do we lose? It was a low cost action by the United States. We could always remove the tariffs if they don’t work or lead them on, but it’s notified all sorts of other countries that are dealing with Russia, that be careful. Now, the fact that we do work with Russia occasionally is an act of hypocrisy. And it also say, “Don’t do as I do. Do as I say,” which is what parents like to say as children.

So when you think about it, one of the great problems of the Cold War was the hyper predictability of the United States. It was predictable with the Europeans, with the Vietnamese, and we wound up in all sorts of conflicts where we were highly predictable in our action. Some of them were costly in lives and so on. What Trump is doing is trying to reduce the threat militarily by using his economic power, and that’s something we didn’t do, and it seems outrageous. On the other hand, other countries do it all the time. So my point here is that if you want a low risk action against a potential military competitor, economics is a good way to do it.

CHRISTIAN SMITH: And I mean, there was obviously talk from, I think from Trump himself, I could be wrong there, but from others as well, that these secondary tariffs should be 200% at the moment, they’re only 25. I mean, was the reason he’s done it like that, was that to protect the relationship with India?

GEORGE FRIEDMAN: No, I think Trump babbles, but it’s not a bad thing to be incomprehensible and untrustworthy because that increases the other side’s anxiety. So he pulled a number out of the hat. He didn’t know what it was going to be, and he’s constantly shifting. So one of the things the United States has done is I don’t think he planned this. I think he forgot what the number was. 200% or whatever it is.

But he threatens. Sometimes he carries it out, sometimes he doesn’t. Sometimes he does something he didn’t even talk about. It’s an extreme form of foreign policy for the United States, but a very common form between relations with other countries, between other countries, each other. So, in fact, it is in some sense a return to the norm. The period from 1945 to now was not the norm, where the United States was an utterly predictable country, utterly willing to carry out actions not much in our favor, and so on and so forth. Now Trump is engineering this. There are more ways that he could possibly do it. But the very fact that he’s so unpredictable scares other nations and gives us an edge.

India’s Long-term Strategic Importance

CHRISTIAN SMITH: George, final question, bringing it back to India. I mean, India, as you say, it’s no China economically, and there’s no war revolving that the US is trying to stop. With it as there is with Russia. But it is the largest country by population now in the world. It is an emerging country, an emerging power, and will probably be far more significant globally than it is now in the coming decades. So is there a risk here for the US and the west more generally of alienating India, or is that not really how geopolitics works?

GEORGE FRIEDMAN: Well, you know, you can be insulted by something in a business deal and still do the deal because you have to. In the same way here, the United States is the largest economy. The Chinese is second. But its per capita income is terrible. It’s like 69th in the world. This is the market you have to have if you’re going to be a global economic power.

Could the Indians do without the United States? Probably not. Can China do without the United States? Has it been able to? So when you take a look at the necessity and the insult, you live with the insult you do as necessary. So this is not something that we’re going to be talking about in 30 years. This was a passing thing. It might go away in a few days, you don’t know.

But it really was not directed against India. It was abusing India as a demonstration point. And in that sense, I have no doubt that India will emerge very significantly as an economic power, but not without a good relationship with the United States economically. It needs access to that market. So it’s something we can afford, I think.

CHRISTIAN SMITH: George Friedman, thank you very much as always, and thank you out there for listening to this episode from Geopolitical Futures. We’ll be back again with a new podcast soon, but until then, you can go to the geopoliticalfutures.com website to read much more about all of this, and otherwise, we’ll see you later. Take care.

GEORGE FRIEDMAN: Goodbye. Take care.

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