The fact is that India is an extremely protectionist country that expends a lot of resources in order to block American exports into their market. India’s weighted mean applied tariff is a high 6.32% compared to America’s relatively low 1.61%. In addition, India has a variety of non-tariff barriers that strategically discriminate against American exports.
That being said, do I believe the U.S. should engage in protectionism in order to dissuade India from further protectionism? No I don't, because I believe moving towards truly free trade is a laudable goal due to the prospects for further specialization, trade freedom, and resulting prosperity. Unfortunately, that is not reality.
The reality is that the U.S. has the right to negotiate an end to ridiculous levels of Indian protectionism in order to retain “preferential trade partner” status. If the Indians balk, we have the right to make whatever decisions we feel like, because we have a much larger economy and more national power.
If the Indian negotiators come back with proposals such as a reduction in tariffs, a moderation of non-tariff barriers, or formally partnering with us in the emerging Cold War against the Chinese, maybe the U.S. can forget about this policy.
The U.S. is not interested in allowing trade issues to fall by the wayside in exchange for strategic and security cooperation anymore because we don't need it. The Cold War ended almost 3 decades ago. If someone is willing to work with us against the Chinese, they might get some slack. If not, they’ll get pummeled by American might. Is this the trade environment that I want? No, but what I think doesn't affect the international trade regime and geopolitics.
The U.S. will more or less get what it wants with regard to trade. If it doesn't, the U.S. is largely content to put the negotiations on ice and just wait. South Korea, Canada, and Mexico capitulated. The U.K. and Japan will capitulate soon. The EU is contemplating bending the knee, but that doesn't matter much because the EU as a functioning institution is likely to collapse in less than a decade. With regard to the Chinese, things are likely to stay on ice.
When we talk about international trade, we must remember the key facts. The U.S. built the global free-ish trade order. That order is secured by the overwhelming strength of the U.S. Naval and Air forces that dominate the world’s oceans and skies. American might is what keeps the world free for the relatively free movement of goods, services, capital, and people. The U.S. built global trade and financial institutions such as the World Trade Organization, the World Bank, and the International Monetary Fund along with the relevant processes for modern global finance. There is no free trade without the Americans accepting and choosing to defend that order. There is no other nation or strategic group of nations on earth that has the capability, will, and knowhow to maintain that order. Not the Chinese, not the Brits, not the EU, not the Japanese, and certainly not the Indians or the Russians. No one can do what the U.S. has done since 1945, this kind of world hegemony has never been seen before.
