While he needs to deal with these headwinds, Modi also has to answer opposition charges of vote-rigging in the 2024 general election

International News via Reuters:

Indian Prime Minister Narendra Modi is navigating one of the most challenging stretches of his 11 years in office. A contentious ceasefire with archenemy Pakistan, renewed scrutiny over his age and a diplomatic chill with the United States despite much-publicised rapport with President Donald Trump have converged to test his leadership like never before.

While he needs to deal with these headwinds, Modi also has to answer opposition charges of vote-rigging in the 2024 general election. The challenges are coming to a head just before a difficult electoral battle in Bihar, one of India’s most politically significant states.

A defeat in the vote to the state assembly would not affect Modi’s position in the national parliament, but it would be a hammer blow to the reputation of a leader who has maintained a vice-like grip on power since he was elected prime minister over a decade ago.

This week, Trump’s administration announced a total 50% tariff on imports from India, among the highest of any country in the world, throwing the bilateral relationship into deep disarray. Yet, until just six months ago, Trump and Modi were exchanging bear hugs and describing each other as close friends.

“The Indo-U.S. relation sort of revolved around the personalities of Donald Trump and Narendra Modi,” New Delhi-based political commentator Arati Jerath said.

“So now when it’s souring, Modi has no buffer at all. There is a fair amount of disappointment that this strong leader has not been able to show the kind of strength and muscularity that he claimed to have.”

Modi, however, has begun to push back. He said on Thursday the country was ready to stand by its farmers at any cost, without referring to the tussle with the U.S. on opening up the agricultural and dairy sectors to lower Trump’s tariffs.

“India will never compromise on the interests of its farmers, livestock rearers and fishermen,” he said at a public event. “And I am fully aware that I may have to pay a very heavy price personally, but I am prepared for it.”

In a social media graphic posted by his party, Modi is shown taking blows on his back from stones, bricks and a dagger depicted as tariffs, while shielding a farmer with a plough on his shoulder.

Analysts say Modi’s comments indicate that the tariff battle with the U.S. would be front and centre of the campaign in Bihar that is likely to kick off next month. According to a recent survey by the VoteVibe agency, Modi’s National Democratic Alliance will struggle to retain power in the state, largely because of a lack of jobs.

However, VoteVibe founder Amitabh Tiwari said any nationalist backlash against Trump is unlikely to sway voters in what he calls a “hyper-local election” in the economically backward state.

“There is no over-arching theme other than unemployment,” Tiwari said.

WORLD’S MOST POPULAR

In other signs of pushback against Trump, Modi is planning to visit China in coming weeks and is likely to meet President Xi Jinping as well as Russia’s Vladimir Putin, suggesting a potential realignment in relations.

Modi also spoke with Brazil’s President Luiz Inacio Lula da Silva on Thursday to discuss the tariffs. The two countries, founding members of the BRICS bloc that Trump has criticised, are the two most affected by the U.S. levies. Russia, China and South Africa are the other founding members.

Modi remains the world’s most popular head of government, with an approval rating exceeding 75%, according to data intelligence firm Morning Consult. Yet, even his core Hindu nationalist base was unsettled by a surprise ceasefire with mainly Muslim Pakistan in May, following the most intense military confrontation between the two old enemies in decades.

The ceasefire sparked controversy at home and abroad. Modi’s government has repeatedly denied Trump’s claims that he leveraged trade negotiations to broker the truce. Trump has since notably strengthened ties with Pakistan, which publicly thanked him for his role in ending the conflict, further complicating India’s diplomatic narrative.

At home, the main opposition Congress party has presented what it says is proof of Modi’s Bharatiya Janata Party (BJP) and the Election Commission “rigging and stealing” the 2024 general election by adding fake people to voter lists.

“There is a huge criminal fraud being perpetrated on this country by the Election Commission and the party in power”, Congress leader Rahul Gandhi told a press conference on Thursday.

The BJP dismissed the allegations as Congress’s frustration at repeated electoral losses: “When Rahul Gandhi can’t cheat his way to power, he calls it a conspiracy,” it said on X.

The Election Commission asked Gandhi to “stop arriving at absurd conclusions and misleading the citizens of India”.

As Modi approaches his 75th birthday next month, his age has also become a topic of discussion, since other BJP leaders were sidelined after they passed the milestone. The BJP however maintains that there is no formal retirement age for its leaders.

All in all, analysts said, Modi faces an onerous task.

“Mr. Modi’s brand value is now diminishing very fast, he needs to reinvent himself,” said Rasheed Kidwai, visiting fellow at the Observer Research Foundation think tank in New Delhi.

“The sheen will come off particularly if he loses the Bihar election. Because in India, elections determine everything.”

Reporting by Krishna N. Das in New Delhi; Editing by Raju Gopalakrishnan

The ministry will offer up to 10,000 euros to individuals and up to 20,000 euros to small firms

International News via Reuters:

Italy has approved new subsidies worth almost 600 million euros ($698 million) for the purchase of electric vehicles as sales lag, the environment and energy ministry said on Friday.

The ministry will offer up to 10,000 euros to individuals and up to 20,000 euros to small firms, covering up to 30% of the total purchase price of a new electric car or commercial vehicle.

The subsidies, financed by European Union’s post-COVID recovery funds, will be restricted to individuals or companies based in larger urban areas with the aim of reducing pollution and improving air quality.

To qualify for the programme, beneficiaries will be required to scrap an internal combustion vehicle of up to the Euro 5 emission class, dating from 2015 or earlier, the ministry said.

EV sales are struggling in Europe, hindered by high prices and lack of charging stations, even as the EU is using regulations in an effort to phase out combustion engine cars to meet carbon emissions goals.

In Italy, battery electric vehicles accounted for only 6% of new car sales in June, compared to more than 15% across the European Union.

Next year, the bloc is due to review its ban on the sale of new petrol and diesel cars from 2035 under pressure from the auto industry and some national governments to slow the transition.

($1 = 0.8596 euros)

Reporting by Alvise Armellini; Editing by Joe Bavier

Mexico and Canada are in many ways natural allies

International News via Reuters:

Prime Minister Mark Carney is scrambling to save his country’s relationship with Mexico after it disintegrated late last year when Canadian officials suggested they’d be better off negotiating a trade deal with the Trump administration alone.

Carney attempted to break the ice in a phone call with Mexican President Claudia Sheinbaum in July by complimenting an indigenous-made soccer ball she had gifted him at their last meeting and saying he hoped to visit Mexico soon. 

The warm overture, relayed to Reuters by three people familiar with the call, highlights Canada’s attempt to repair the damage after a string of public slights by Canadian officials, including Ontario Premier Doug Ford, who said in November that any comparison of Canada to Mexico was “the most insulting thing I’ve ever heard.”

Mexico and Canada are in many ways natural allies. They’ve benefited from trilateral trade deals with the U.S. for 31 years: first the North American Free Trade Agreement in 1994 and subsequently the U.S.-Mexico-Canada Agreement that replaced it in 2020.

But the relationship between the two countries has been beset by allegations of betrayal on both sides and memories of fraught negotiations with Trump. Top officials virtually stopped talking in November after former Canadian Prime Minister Justin Trudeau mused about cutting a trade deal with the U.S. without Mexico, suggesting the U.S. and Canada were more aligned on issues like China.

A few days later, Trudeau flew to Mar-a-Lago for a surprise visit with U.S. President Donald Trump, stunning Mexican officials. It seemed as if Canada had already developed a strategy for dealing with Trump while Mexico was wringing its hands, one Mexican official said. 

An infuriated Sheinbaum directed her lieutenants to stop dealing with the Canadians, at least until Trudeau left office, according to the official, who spoke on condition of anonymity.  

Nine months later, Canada finds itself on the back foot with Trump while Mexico is reveling in its relative success. Last week, Trump gave Mexico a 90-day pause on new tariffs going into effect, keeping the rate at 25%, while raising tariffs on Canada to 35%.

Now, in a remarkable about-face, Canadian officials are on a campaign to win back Mexico’s favor and save the trilateral trade deal Trudeau suggested he was willing to ditch, according to two people with knowledge of the countries’ tense relationship.

That treaty continues to shield a large number of Canadian and Mexican exports to the U.S. from Trump’s latest rounds of tariffs.

Carney said on Tuesday that “it’s important to preserve” the trilateral agreement while Canada’s foreign minister and finance minister traveled this week to Mexico for a two-day visit with top officials. 

   Asked by Reuters whether the purpose of her visit was to repair shattered ties with Mexico, Canadian Foreign Minister Anita Anand said: “It is extremely important for Canada to have a resilient relationship with Mexico, and indeed, I’m here to kick start that relationship.”

Sheinbaum, on X, reiterated that message. “We’re strengthening the relationship between our countries,” she wrote.

A spokesperson for Sheinbaum declined to comment. 

‘LOOK IN THE MIRROR’

Whether they repair their partnership and become a tightly-knit bloc in negotiations with the U.S. will have lasting consequences not only for the three countries but the thousands of companies that depend on free trade in the region, from automakers to medical suppliers, three trade analysts said.

“The big question I have is whether there’s a real sense of communication or coordination between Mexico and Canada,” said Kenneth Smith Ramos, a former trade negotiator for Mexico. “I don’t get the sense that is the case. I think both are operating bilaterally with the U.S. and that’s it.” 

He said Mexico saved Canada from being ousted from the USMCA treaty when Canadian and U.S. negotiators got into a “severe fight” during negotiations in 2018.

“Mexico insisted that the agreement remain trilateral,” said Smith, who represented Mexico in those negotiations, adding it’s that history that likely made Mexican officials especially bitter when Canada appeared to spurn Mexico to curry favor with Trump.

A Canadian source involved in the 2018 talks sharply disputed that characterization. 

“The Mexican team went behind our back and negotiated their own bilateral deal with the U.S. Trump then used that to pressure Canada to make concessions,” said the source, who spoke on condition of anonymity.

The source said the bad blood with Mexico stemming from the 2018 negotiations is part of the reason Canadian officials expressed interest last year in a bilateral deal with the U.S.

“If there are Mexicans who feel Canada betrayed them, they should look in the mirror.”

TRADING BARBS

After Trudeau came away from Mar-a-Lago empty-handed at the beginning of the year, the relationship became openly hostile with him and Trump trading barbs. Sheinbaum, meanwhile, insisted on staying on Trump’s good side, virtually at any cost, according to three people familiar with her strategy. 

As the Canadians fell into a deeper rut with Trump, Carney, who replaced Trudeau as prime minister in March, sought to make amends with Mexico by inviting Sheinbaum to attend the Group of 7 summit in Canada. 

Sheinbaum delayed accepting for nearly three weeks but eventually assented. Trump left the summit early without meeting Sheinbaum, a development that “worried” Mexico’s president, one of her advisors said. 

Carney’s invitation and Sheinbaum’s attendance appeared to be a reset of sorts in the two countries’ relationship, said Pedro Casas, CEO of the American Chamber of Commerce of Mexico. It sent a “clear message” that the two leaders are “in this together,” he said.

The Canadian prime minister extended his good-faith gestures to Sheinbaum during their follow-up phone call in July. He told her that the following day Canada would announce limits on imports of steel produced in other countries in an effort to help the country’s domestic steel sector, which is reeling from Trump’s 50% tariffs.

But Carney assured Sheinbaum that the measure wouldn’t affect imports from Mexico, according to two people with knowledge of their conversation.

Whatever her reservations about Canada, Sheinbaum has made clear she is completely invested in saving the trilateral trade deal with it and the U.S. If the three countries fail to renew the pact next year, the treaty will automatically expire in 2036, creating a potentially disastrous economic blow to Mexico. 

U.S. Secretary of Commerce Howard Lutnick has privately raised the idea of ditching the agreement in favor of a bilateral trade deal with Mexico, according to the Mexican official – a scenario the person said Mexico is not keen to pursue. 

Secretary Lutnick did not respond to a Reuters request for comment. The White House did not respond to a request for comment.

“Mexico knows very well that if we try to go head-to-head, toe-to-toe with Washington the asymmetry in the negotiations is going to favor the U.S,” said former Mexican trade negotiator Juan Carlos Baker. “It’s always better to have a three-player game.”

Reporting by Emily Green, David Ljunggren and Stephen Eisenhammer. Editing by Christian Plumb and Michael Learmonth