Globalisation no longer guides US policy, India must rethink strategy: Meera Shankar

Globalisation is no longer the guiding principle of US economic policy, and India will need to adjust its trade and diplomatic strategy accordingly, former Indian Ambassador to the US Meera Shankar said, reacting to President Donald Trump’s address at the World Economic Forum in Davos.

Trump used his Davos speech to claim an “economic miracle” at home, saying his policies had defeated inflation, boosted growth and revived American manufacturing within a year of his return to office. Calling it “phenomenal news”, he contrasted the current situation with what he described as “stagflation” under the previous administration. He defended a sharp shift in energy policy, prioritising domestic energy production, opening new plants and rejecting wind power approvals, while backing tax cuts and higher tariffs as central to his economic agenda.

Trade and security were closely linked in Trump’s remarks, particularly in his comments on Greenland and Europe. He argued that US security interests required control over Greenland and warned Europe that there would be consequences if Washington’s demands were not met.

Speaking to CNBC-TV18, Meera Shankar said Europe’s response marked a clear break from the past. “This is not just a transition or something temporary, but a rupture or disruption of the old order,” she said, pointing to unusually strong pushback from European leaders.

Harsh Pant, Vice President at the Observer Research Foundation, said Trump had been clear and deliberate in laying out his position. “Mr Trump has marked his territory very carefully and very clearly,” Pant said, adding that the strategic logic behind Greenland made sense from a US national security perspective. According to Pant, Trump’s core message to Europe was transactional: cooperate with Washington or face economic and political consequences.

Pant said Europe’s ability to respond was constrained by internal divisions and limited leverage. While tools such as reciprocal tariffs, restricted market access or delays in trade agreements existed, he noted that “it is not entirely evident that Europe has the levers to pull”, especially on national security and NATO-related issues. This uncertainty, he said, would shape negotiations in the months ahead.

Also Read: Davos 2026 | Trump hails ‘economic miracle’, says US growth outpacing global forecasts

For India, the message from Davos was clear but challenging. Shankar said Trump’s speech reinforced that domestic political priorities in the US would dominate economic decision-making. “Globalisation is no longer the theme of the day,” she said, noting that US policies were increasingly driven by the interests of American workers under the “Make America Great Again” agenda.

She said India would need to look for opportunities within this framework, even as trade talks with Washington remain uncertain. At the same time, progress on an India–EU trade deal could provide India with greater strategic flexibility. If concluded, such a deal would signal that India has alternative markets and partners, easing pressure in negotiations with the US at a time when global trade is becoming more fragmented and transactional.

Below is the excerpt of the discussion.

Q: It’s been a long Donald Trump speech, and this was very much a Trump Davos. How do you see the statements Donald Trump made on Greenland, saying that he cannot defend Greenland just with a licensing agreement, that he needs to acquire it and own it to be able to defend it and support NATO in the future? He said he is looking at mediation and negotiation and does not want to use force. How does this set the tone ahead of his talks with European leaders on Greenland?

Shankar: For the first time, you have seen European leaders, instead of pussyfooting around Trump — which is what they have been doing until now, trying to avoid offending him — actually push back, and push back strongly, at least in terms of rhetoric. Whether it is President Macron, the leaders of Belgium or Denmark, or Ursula von der Leyen, the President of the European Commission, you are seeing a significant pushback from European leaders and a signal that the EU should prepare for a more independent stance in the future. This is not just a transition or something temporary, but a rupture or disruption of the old order.

On Greenland, President Trump has not explicitly ruled out the use of force until now. In this speech, he has called for negotiations while reiterating the US claim to Greenland and the reasons why it is essential for US security. He has said that he is not going to use excessive force to take Greenland, which he could have if he had decided to do so. This at least opens a door for discussions among NATO partners, though it remains to be seen how NATO will respond.

Trump has also said that Europe has an option: they can say yes and America will appreciate it, or they can say no and America will remember. “Remembering” could include pushing up tariffs if, by June, there has been no progress on the US acquisition of Greenland — from the 10% already imposed to 25%, which would make the effective tariff on Europe extremely difficult for Europeans to manage.

Q: Harsh Pant, we saw a united Europe and very strong words from leaders like Emmanuel Macron and Canada’s Mark Carney. Do you think that with the threat of a trade bazooka, the EU and the UK will be able to stop Donald Trump?

Pant: I think no one knows, frankly. Mr Trump has marked his territory very carefully and very clearly. The rationale he has given for Greenland actually makes sense from a strategic point of view, as far as America is concerned. He has laid out a very clear argument for why it is necessary for American security.

He is also saying that Europe has not been filling the void, and therefore the security architecture is crumbling while America is doing most of the heavy lifting, which he argues is unsustainable. So his message is: give America Greenland and we will try to sort it out; otherwise, there will be consequences.

The negotiations will be all about those consequences. When he says “if you say no, we will remember”, it means America will put everything on the table. Europe has articulated a desire to push back, but there are enough internal divisions within the EU. While there is a new intention to push back against the US, it is not entirely evident that Europe has the levers to pull.

Apart from trade measures, such as reciprocal tariffs, declining market access for the US in certain sectors, or delaying approval of an EU-US free trade agreement, Europe’s options are limited — both economically and because of internal divergences within the EU. It will be very interesting to see what happens at the negotiating table. Trump has made a powerful case and will make it again. I am not sure whether Europe has a strong response, particularly on national security and NATO security.

Q: Ambassador Shankar, in just a few seconds, what are the cues for India? We still don’t have a trade deal with the US, and the mood in Delhi is uncertain. Trump has outlined priorities on energy, trade, migration, and a strong United States. What should India read into this?

Shankar: Globalisation is no longer the theme of the day. You heard the US Commerce Secretary say that policies are being driven by the interests of Western workers, particularly American workers. That underpins Trump’s “Make America Great Again” agenda.

India needs to look for opportunities within this framework. It will not be easy, but India has withstood US tariffs so far. We also need to see whether the India-EU trade deal materialises. Ursula von der Leyen said there is still ground to cover, but if it does come through — and it is likely — it could be signed by January 26 and would be the “mother of all trade deals”. That would signal that India has other options and markets, which could ease pressure in negotiations with the US.

Watch accompanying video for entire discussion.