If the UK and India manage to avoid new US tariffs, it would mark a significant diplomatic and economic success for both nations. In a global landscape where trade restrictions are increasingly being used as political tools, being exempt from US tariffs signals strong bilateral ties and strategic importance in Washington’s broader economic calculations.
Why It Matters for India and the UK
For India, dodging tariffs would reaffirm its growing role as a key economic and geopolitical partner to the US. Over the past decade, India has emerged as a counterbalance to China, with Washington increasingly seeing New Delhi as a crucial ally in maintaining economic and security stability in the Indo-Pacific. If India is spared from tariffs, it would indicate that the US prioritises keeping India onside, particularly in areas like defence, technology, and supply chain diversification.
For the UK, avoiding tariffs would highlight its ability to navigate a complex global trade environment post-Brexit. With no EU safety net, Britain has had to rebuild its economic alliances, and maintaining smooth trade relations with the US is vital. If tariffs are imposed on EU countries but not on the UK, it would suggest that Britain still enjoys unique advantages in Washington, whether through its historic ties or the potential of a future US-UK trade deal.
What a Trump Comeback Means
With Donald Trump returning to the White House, expect an even stronger push for US-India ties. Trump has long favoured India as a strategic and economic partner, often citing Modi as a key ally. During his presidency, the two leaders shared a highly visible and friendly relationship, with Trump attending Modi’s “Howdy, Modi!” event in Houston and Modi participating in the “Namaste Trump” rally in Ahmedabad.
A second Trump term could mean:
- Stronger Defence Deals – Trump sees India as a crucial buyer of US arms and defence technology. A renewed focus on military cooperation could see India access more advanced weaponry and surveillance technology.
- Greater Trade Opportunities – Trump, unlike Biden, has preferred bilateral deals over multilateral agreements. He may push for a comprehensive trade deal with India, lowering barriers for goods and services.
- A Tougher Stance on China – If Trump escalates tensions with Beijing, India would likely be a preferred alternative for supply chains, manufacturing, and investment from US companies.
Where the UK Fits In
For Britain, Trump’s return could be a double-edged sword. While he is keen on direct trade deals, his "America First" approach could mean more aggressive negotiations. However, if India continues rising in global economic rankings under a pro-Trump US, the UK could benefit by aligning itself closely with both nations. London’s historic ties with India and its status as a financial hub would position it well to play a bridging role between the two.
Conclusion
If India and the UK avoid tariffs now, it's a sign of their growing leverage in Washington. With Trump’s return, expect a more transactional but potentially lucrative US-India relationship, with the UK needing to position itself smartly to capitalise on shifting global trade dynamics.