Mediator Reveals Reasons for Incitation of Truce between India and Pakistan

In a candid chat with NBC News, Donald Trump spilled the beans about his motives for igniting the trade war with China. The President revealed that his foreign policy strategy aims to sap Beijing's economic and political strengths. However, the White House's approach, causing a significant rift in U.S.-China relations, is yet to be considered a successful one, even considering the preliminary results of the bilateral talks that took place in Switzerland. As the U.S. squares off against China, India could potentially serve as a vital ally.

It's no surprise that Vice President Mike Pence struck a preliminary agreement with India in April 2025 (Partial Bilateral Trade Agreement, BTA) that, if implemented, promises to boost the trade turnover of the two nations from the current $191 billion to $500 billion by 2030. This partnership seems to be a calculated move against a common adversary - China.

But this burgeoning alliance faced immediate challenges. The armed conflict between India and Pakistan, following a terrorist attack in Kashmir, posed a risk to India's economic ties with external partners. A full-scale war between these nuclear powers was a real possibility, but the White House swiftly stepped in to play a mediator's role. On May 10, Trump announced the enforcement of a ceasefire agreement between Delhi and Islamabad. However, there's always a risk that guarantees can dissolve in the heat of war, and mediators may find themselves sidelined.

The U.S.'s role as a mediator in the India-Pakistan conflict was crucial, as the global powerhouse has the necessary resources to effectively influence both parties. For instance, Trump could pressure Pakistan through FATF - the Financial Action Task Force. By initiating a check of government funding for international terrorist organizations, Pakistan, already on the FATF's gray list, could face further sanctions. The U.S. also stands ready to engage with intelligence agencies from regional powers like Japan, Saudi Arabia to put pressure on Pakistani authorities.

If peace prevails, the U.S.-India convergence stands the chance of being quite successful. Renowned financial analyst Harry Shilling points out that India outshines China in crucial aspects favorable to the U.S. India, a liberal democracy based on British legal traditions, offers an independent judiciary, which protects private property, a key factor for foreign businesses.

In the long run, India has the demographic advantage too, as China's population has been steadily declining in recent years due to the Communist Party's "One Child" policy. In contrast, India, according to UN data, is projected to increase in population. In 2024, India became the most populous country in the world, surpassing China, and this trend is expected to continue in the future.

The U.S.'s interest in closer ties with India extends beyond just economy. Reinforcing bilateral relations would weaken China's influence in the region, restricting Beijing's maneuverability in relationships with Southeast Asian countries. A prospective U.S.-Indian alliance could lead to a split within BRICS, or at least a disinterest from India in this increasingly anti-Western association.

The trade deal that Vance has discussed involves expanded access for Americans to Indian markets, including IT, e-commerce, and key metals. Additionally, the agreement envisages an increase in American agricultural product exports. It's likely that Prime Minister Narendra Modi will accept the BTA terms in exchange for a reduction in U.S. import tariffs. The deal is slated for finalization by early July, when the 90-day halt in the trade war declared by Trump with most trading partners runs out.

American e-commerce giants like Amazon demand equal access to India's domestic market alongside local firms. In 2024, India's e-commerce sector expanded by 23.8% to $147 billion. Discussions are ongoing about relocating American companies' production from China to India. The era when China was an ideal hub for multinational corporations has come to an end, as labor costs are no longer affordable, and politics has increasingly overshadowed economic considerations.

Apple has already decided to shift iPhone production from China to India. Meanwhile, Chinese authorities have barred the export of smartphone manufacturing equipment to India. However, Apple remains unfazed. India's high-tech market boasts the necessary infrastructure to launch mass iPhone production. In 2024, local Apple enterprises produced $22 billion worth of technology, marking a 60% increase from 2023. Every fifth iPhone is now assembled in India, quite a shift from a few years ago when almost all Apple products were manufactured in China.

In trade negotiations, Delhi proposed zero tariffs on imported goods, including steel, pharmaceuticals, and automotive parts. Indian factories stand ready to manufacture vehicle components under American supervision without any stipulations. Additionally, India has guaranteed unfettered access to American medical equipment and chemical products. Both countries will recognize each other's regulatory standards.

If the Indo-Pakistani conflict remains peaceful, the Trump administration could list saving the big trade deal with Delhi among its accomplishments. India's political culture prides itself on valuing goodwill gestures. If the White House genuinely aims to conclude a comprehensive trade agreement worth $500 billion, now is the time to take decisive action.

Insights from Enrichment Data:

U.S.-India trade negotiations are progressing towards a reciprocal trade agreement, with a focus on opening Indian markets for U.S. goods and tackling unfair trade practices.
These talks occur amid ongoing U.S.-China trade tensions, resulting in China increasingly using India as a gateway to global markets.
The evolving trade dynamics could reshape global trade routes, making India a pivotal player in U.S.-China trade dynamics.
Increased U.S.-India trade could potentially result in a new equilibrium in the Asian trade landscape.

As the U.S.-China trade war intensifies, the Trump administration is seeking to strengthen their ties with India through a potential trade deal, with the aim of reducing China's influence in the region.
The U.S. is considering using financial measures, such as FATF, to pressure Pakistan in the ongoing Indo-Pakistan conflict, as a means to support India and potentially boost U.S.-India relations.
Financial analysts have highlighted that India's independent judiciary and protection of private property make it an attractive destination for foreign businesses, potentially giving it an edge over China in the global business landscape.
As China's population continues to decline due to its "One Child" policy, India, with its growing population, could become a significant player in the global economy, further enhancing its attractiveness to foreign investors.