'Shake Modi’s hand, stab him later': US economist slams Trump’s India trade pivot, says China holds aces

Donald Trump’s tariffs are rattling global trade, and India is already feeling the sting. But according to top economist Steve Hanke, a former advisor to President Ronald Reagan, the pain may only be the beginning.

In a wide-ranging conversation with Hindustan Times, Hanke warned that Trump’s trade policies, his pivot away from India, and his flirtation with Pakistan could spell economic and geopolitical trouble.

Hanke did not mince words. “Trump’s the kind of guy who can shake Modi’s hand in the morning and stab him in the back at night,” he said, arguing that New Delhi cannot rely on Washington’s warmth to last.

He added that China holds far more leverage than the White House admits: “It has what we say an ace up its sleeve… in mining, metallurgy, and material sciences. China dominates in all three. They’ve had this position for quite some time.”

That dominance, Hanke said, has forced Trump to rethink alliances. “One reason I think for Trump’s pivot away from India and towards actually, of all things, Pakistan—we have to get Pakistan in the picture,” he told the podcast. “Why, all of a sudden? I mean Pakistan is a stagnant economy.”

For Hanke, the explanation lies in geopolitics, not economics. He claimed Pakistan’s military elite has siphoned off 37% of the country’s foreign debt into offshore havens, mostly Dubai, yet Washington still courts Islamabad for access to air bases close to Iran.

“Their field marshal has been in the United States two times in the last month,” Hanke said. “They’re getting set up for another attack—or a potential attack—on Iran.”

The economist was scathing about tariffs, calling them a hidden tax on American consumers. “Where does the tax come from? It comes from Americans,” Hanke said. “Indians don’t pay when they sell me something—the importer pays. Tariffs destroy gains from trade. Trade is mutually beneficial, tariffs are not.”

He warned that the consequences extend beyond higher prices. With U.S. money supply growth “very anemic” over the past two and a half years, Hanke believes the economy is teetering. “The U.S. is on the verge of going into a recession,” he cautioned. “All these policies are a path towards destruction… Napoleon said never interfere with your enemy when he’s in the process of destroying himself. That’s what we’re witnessing.”