Modi’s tariff tap dance with Trump

This is an audio transcript of the FT News Briefing podcast episode: ‘Modi’s tariff tap dance with Trump’

Marc Filippino
Good morning from the Financial Times. Today is Friday, March 14th, and this is your FT News Briefing.

Intel had a rare bit of good news, and Russia is playing hardball over a potential ceasefire with Ukraine. Plus, India and the US are strong trading partners, but will tariffs get in the way of all that?

I’m Marc Filippino and here’s the news you need to start your day.

Vladimir Putin has set some tough conditions for a ceasefire in Ukraine. But the Russian president technically supports the idea of the 30-day pause in fighting that the US proposed this week. So what does this current moment look like for Ukraine? The FT’s foreign editor, Alec Russell, is just back from a visit to the country, and he joins me now. Hey, Alec!

Alec Russell
Marc, hi! Very good to be back with you.

Marc Filippino
So do me a favour, can you just describe the mood in Ukraine? How tired are people of this war?

Alec Russell
They are immensely tired of this war, Marc. It has been going on full tilt effectively for three years and they are bone tired. I mean, take Kyiv — the capital, for example — every night some drones come over and explode over Kyiv and possibly a ballistic missile. And I spoke to one soldier in Kyiv the other day, and he said, it is very strange, we’ve reached a situation where now people are so relaxed about these missiles that they sort of say, oh, that sounds like it was a ballistic missile just in the next-door neighbourhood, but I don’t think it was a very big one. And they joke about it. So obviously that’s great that they’re sort of come into terms, but it’s miserable, miserable, miserable in Ukraine right now.

Marc Filippino
Yeah. Tough conditions that they’ve desensitised themselves to. Does that mean that they’re willing to accept a deal on Russia’s terms? And what would those terms be?

Alec Russell
Absolutely they are not willing to accept a deal on Russia’s terms. Russia’s terms haven’t changed since Putin launched the full-scale invasion in February 2022. He wants Ukraine to effectively be a neutered state. He doesn’t want it to have close links to the west, he wants it to be in the shadow of Moscow. And Ukrainians, however exhausted they are by this war and demoralised, they feel why, after all we’ve been through, should we effectively capitulate. And also they have at the back of their mind that actually this is a very slow progress for Russia in this war. And so they feel that maybe they’re just gonna have to keep going.

Marc Filippino
Yeah. But on the flip side of that, Alec, Ukraine has lost confidence in a wavering major ally in the United States. What does Ukraine do if it has to keep fighting with or without American help?

Alec Russell
So it faces three massive problems if America pulls the plug on its aid permanently. It loses American intelligence, it loses air defence systems — which have been protecting Ukraine’s major cities, and then the third thing they worry about losing is the Starlink satellite system — which has been essential for battlefield communications.

Now that said, Ukrainians, they point to two things: they say that they have built up in the last year or so an extraordinary drone manufacturing industry. And this is immensely important because the war has become increasingly a war of drones and robotic vehicles. And then they point to Europe and they say, if, if, if Europe can deliver on what it promises to deliver, then maybe they can just about hull Russia off.

Marc Filippino
OK, so, Alec, where does Ukraine go from here? We have the US ceasefire plan on the table, what’s next?

Alec Russell
Well, this is now . . . It’s a very, very interesting time. Even though Ukraine would not accept a ceasefire — let alone a full-term settlement on Russia’s terms — absolutely, just about everyone in Ukraine wants this war to end — as long as it ends, as they say, fairly and justly. And I think that privately, increasingly, most Ukrainians would accept that much of the territory that Russian forces have taken control of in the last three years is lost to them.

And what is essential to them, though, is not the regaining of that territory so much as some form of a security guarantee from the west that ensures that Putin’s not gonna come back for more. And I struggle to see how Putin’s going to agree to that.

Marc Filippino
Alec Russell is the FT’s foreign editor. Thanks, Alec.

Alec Russell
Thank you. Marc.

Marc Filippino
Intel had a good day yesterday, and that hasn’t happened a lot lately. The US chipmaker’s share price soared by as much as 15 per cent. The FT reported on Wednesday that Intel has appointed a new top boss to take over the hot seat. Lip-Bu Tan will take over as CEO — he’s the former head of the software group Cadence. Tan is replacing Pat Gelsinger, who was ousted by the board in December. And oooh boy, does Tan have his work cut out for him?

You see, Intel is the only US company that can theoretically make super high-end chips. Most other companies are in Taiwan, which leaves those supply chains pretty exposed if tensions ratchet up with China. But Intel hasn’t been able to capitalise on its position, and in fact, it’s haemorrhaged billions of dollars lately. To put this all into perspective, its share price is down a whopping 45 per cent over the past year.

India is a tough market for foreign competitors to enter. It has protected its home-grown industry since independence in 1947, and it has some of the highest tariff barriers in the world. But could all this be about to change under the Trump presidency?

Donald Trump voice clip
You can’t even sell anything into India, it’s almost restrictive — it is restrictive. You know, we do very little business inside. They’ve agreed, by the way, they want to cut their tariffs way down now.

Marc Filippino
That was Donald Trump speaking a few days ago at the White House. I’m joined by the FT’s John Reed in New Delhi. Hey, John.

John Reed
Hi, Marc.

Marc Filippino
So can you just give us a picture of the current trading relationship between the US and India? How important is it to each side?

John Reed
So the US is India’s largest trading partner by a small margin, roughly on a par with China. From the US point of view, it’s a less important trading partner. If you look at the rank of large economies with which the US runs a trade deficit, I think it ranks number 10. But as you pointed out in your intro, it has some of the highest tariffs in the world. And so this puts India firmly in Trump’s sights.

Marc Filippino
Now we heard that clip of Trump earlier, is it right what he said that India has agreed to slash its tariffs?

John Reed
Not that according to latest information we have, which is that a negotiation is underway, perhaps well underway. The two countries have set a deadline of getting the first tranche of a bilateral trade agreement done by September. I will add with a proverbial gun to India’s head. I think this is something that the Trump administration was demanding. That said, talks are well underway and there have been various leaks coming from both camps that indicate they are talking about substantive issues.

Marc Filippino
How is the Indian government handling trade issues with the US compared, say, with how it’s handled talks with other countries?

John Reed
That’s a really good question. I find it fascinating to observe the language that India uses. Delhi has traditionally been a very tough negotiator on other trade talks, including the Free Trade Association talks, which are ongoing with the UK and the FTA agreement that was concluded with EFTA — that’s the European Free Trade Association last year. In both of these negotiations, India was very tough, even rambunctious, demanding better access for its goods than it was going to give access to its own market.

When you see how Modi conducted himself in Washington last month, he was very and I don’t know what the word is very complacent. Very different power dynamic. He sort of had his shoulders hunched, almost. There was a recognition that the US is India’s most powerful diplomatic partner, an increasing defence supplier and that it had to conduct itself rather differently with Washington than it has done in past trade talks.

Marc Filippino
John, one last question. What could a potential realignment on the tariffs mean for Indian businesses?

John Reed
I think we don’t know yet, it depends on what they agree. Obviously, agriculture is the most sensitive area. India is one of the biggest farming countries and indeed food producers in the world. It’s a very protected market. That’s where some of the highest tariffs are.

If India were to be pressured by Washington successfully to open up to more imports of foodstuffs like US rice or wheat, this would be a really big deal and a shock to the sector. And again, farmers have traditionally been a very sort of intransigent lobby group in India, which is why I’m doubtful this will happen. And again, the Trump administration has been a sort of very volatile actor. So I think it’s very hard to predict from either side how this whole thing will land.

Marc Filippino
John Reed is the FT’s south Asia bureau chief. Thanks, John.

John Reed
Thank you.

Marc Filippino
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news.

The FT News Briefing is produced by Sonja Hutson, Fiona Symon, Lulu Smyth, Ethan Plotkin, Kasia Broussalian, and me, Marc Filippino. Our engineer is Joseph Salcedo. We had help this week from  Michael Lello, Peter Barber, David DaSilva and Gavin Kallmann. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio, and our theme song is by Metaphor Music.