Trump and Modi: Key Allies to Thwart China or Trade Foes?

President Donald Trump hosts Indian Prime Minister Narendra Modi in Washington, D.C., on Monday, having the leader of the world’s seventh-largest economy over for a working dinner — a first for a foreign head of state under the new U.S. president.

But beneath the niceties exist economic tensions.

Trump and India have not had the same public spats the president has had with the leaders of China, Mexico and Germany over trade. But there is reason to expect the White House to press Modi on the issue of equitable commerce.

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For one, the United States has a significant trade deficit with India. In 2016, India exported $24.4 billion more goods to the United States than the U.S. sent to India.

Given India’s size as a nation — 1.27 billion people, second only to China — the deficit could grow worse.

India is also a growing market for U.S. outsourcing, especially in aviation.

But the two nations are also natural partners with many shared interests in the region and continent.

A strong India is seen by most observers as a counterweight, both economic and military, to Chinese aggression.

“Modi is the Indian Margaret Thatcher, a natural ally on the most important geopolitical challenges we face,” said Robert Kaufman, a professor of public policy at Pepperdine University. “Modi is pro-market, pro-American, and pro-Israel. A decent democratic India operating under the rule of law makes a much more reliable trade partner than a predatory, closed China.”

The meeting at the White House Monday is likely to be a balancing act between pursuing greater cooperation on shared interests and Trump’s pressing Modi on unfair policies that harm U.S. workers.

H-1B Visas
One point of contention could be the H-1B visa program. India sends the bulk of tech workers into the United States through the controversial guest-worker scheme.

The H-1B program, kicked off in 1990, was supposed to supplement and aid U.S. tech workers — not replace them. Instead, critics charge the program now is being used to cut wages in the industry by replacing skilled U.S. workers with cheap foreign replacements.

Indians receive roughly 70 percent of the visas granted annually by the program, according to CNN Money.

Trump has ordered a review of the program that many expect will result in a crackdown on its scope — an outcome Modi is sure to oppose.

Tech and Agricultural Market Access
Both nations want better access to Asian and global markets than the other — a simple clash that extends beyond the often-discussed tech and manufacturing sectors.

Reuters has reported India is interested in increasing its exports of fruits, something that has U.S. agricultural producers worried. India also is interested in exporting more generic drugs to the U.S.

On the tech side the United States has high-end products it would like to export to India, a nation with a growing upper-income segment and a growing middle class. At the same time, many U.S. companies are increasingly manufacturing those products in India, which undercuts U.S. jobs.

American tech giant Apple recently moved much of the production of iPhones to India. U.S. automaker Ford announced in November plans to manufacture vehicles in India to export to the U.S.

Those pressures in no small measure impact Trump’s pledge to put “America First” and stop the offshoring of U.S. jobs.

That could be an important roadblock for Modi, who is reportedly interested in a free-trade agreement with the U.S. to establish the kind of economic access to U.S. markets China currently enjoys.