As United States Vice President JD Vance lands in New Delhi on his first official visit, global attention is focused less on photo ops and more on the underlying tremors shaking the foundations of global trade. The political newcomer turned Trump ally is stepping into India at a time when the economic world order is being redefined by the lingering effects of what economists have dubbed Trump’s “tariff neutron bomb.”
Donald Trump’s renewed rhetoric on protectionism—and a potential return to office—has already triggered recalibrations in global trade strategy. The 10% blanket tariff threat on all imports to the US and steeper levies targeting specific sectors, particularly Chinese tech and manufacturing, have sent economic shockwaves well beyond America’s borders. JD Vance’s diplomatic mission, while couched in the language of partnership and cooperation, also carries the burden of reassurance amid growing anxiety about what a second Trump term could unleash.
India in the Crosshairs
India, with its burgeoning economy and deepening ties with the United States, is navigating a delicate balancing act. While New Delhi is keen to present itself as an alternative to China in global supply chains, Trump’s tariff-first policy undermines the foundational logic of globalization that India’s export economy depends on.
India’s technology sector, pharmaceuticals, auto parts, and textiles—all key export areas—are closely watching the policy signals coming out of Washington. A generalized tariff on all imports would not spare India, even if it is not the primary target.
Vance, who has aligned himself closely with Trump’s nationalist economic outlook, faces the challenge of persuading Indian policymakers that economic collaboration with the US remains a stable proposition. His visit includes high-level meetings with Commerce Minister Piyush Goyal, External Affairs Minister S. Jaishankar, and select Indian business leaders, all of whom are expected to raise concerns about the growing unpredictability of American trade policy.
A Structural Decoupling in Play
In an interview with a media outlet earlier this week, global investor and macroeconomic thinker Ruchir Sharma noted that the world is undergoing a “structural decoupling” from the global trade regime that fueled growth in emerging markets like India for the past three decades.
“Trump’s tariff approach is not a tactical blip, but part of a larger move toward de-globalization,” Sharma said. “Countries like India that have benefited from the old trade order must now confront the reality that export-led growth may no longer be a viable long-term strategy.”
Sharma argued that India must pivot more aggressively toward domestic demand and regional trade alliances to insulate itself from global trade shocks. “The age of assuming open markets in the West is over,” he said. “And the sooner India rewires its economic model, the better.”
The Biden vs Trump Divide
Vance’s visit also highlights the increasing divergence in global strategy between America’s Democratic and Republican camps. While the Biden administration has promoted the Indo-Pacific Economic Framework (IPEF) and prioritized multilateral cooperation, Trump’s potential return could reverse much of that progress.
Under Biden, India and the US have strengthened defense ties, collaborated on technology transfer, and explored co-manufacturing in defense and semiconductors. But Vance’s presence signals a realignment that emphasizes economic nationalism over strategic interdependence.
Indian officials are likely to question how stable any bilateral agreement can be if US policy swings so drastically every few weeks, let alone every four years. The concern is not merely about tariffs but the broader uncertainty surrounding American commitments.
Opportunities Amid Uncertainty
Still, opportunity may yet be found in the midst of chaos. India is uniquely positioned to benefit from global supply chain diversification. Western companies are looking for politically safe and economically scalable alternatives to China—and India ticks many of the boxes. But to capitalize on this, New Delhi must expedite reforms in infrastructure, labor, and land acquisition.
Moreover, India may also benefit from a realignment of trade blocs. While Trump’s policies are hostile to multilateralism, they could accelerate the formation of regional alliances like the Indo-Pacific trade corridor and the South-South cooperation framework, where India can play a leading role.
A Test for Indian Diplomacy
Vance’s visit is a litmus test for India’s diplomatic dexterity. On one hand, it must preserve strategic and defense ties with the US, which are too important to jeopardize. On the other, it must prepare for an America that is turning inward economically.
Expect Indian negotiators to push for sectoral exemptions, preferential trade terms, and perhaps even a revival of the shelved bilateral free trade agreement. Quiet backchannel discussions are likely taking place on semiconductor supply chains, AI regulation, and digital trade—areas where cooperation can be decoupled from tariff conflicts.
The Road Ahead
As the 2024 US presidential election looms, global markets will increasingly price in the Trump factor. JD Vance’s India visit is unlikely to resolve any of the fundamental tensions in global trade, but it may help establish channels of communication that will be critical in the years ahead.
India must now hedge its bets—not only between Beijing and Washington, but between continuity and chaos, between economic integration and self-reliance. The era of predictable trade policy is over. What remains is strategy, speed, and the ability to adapt.
And as Sharma pointed out, “For countries like India, the biggest risk is not Trump’s tariffs—it’s complacency.”
