Trump’s Return Raises Concerns Over Potential Trade Tensions with India

Impact of Trump's Policies on International Trade and Indian Exports

There’s an ongoing debate on the impact of President Donald Trump’s government policies on international trade, particularly on India. Trump’s aggressive stance on China could create new opportunities for Indian exporters. However, if the "America First" agenda is implemented rigorously, it could pose challenges as U.S. tariffs on imports may affect not just Chinese goods but also those from other countries. Retaliatory tariffs from other nations could lead to a rise in customs duties, impacting Indian exporters in key sectors like automotive, textiles, and pharmaceuticals.

The tightening of H-1B visa regulations could also affect the growth and costs of Indian IT companies. This sector, heavily dependent on the U.S. market for revenue (with about 60% of revenue coming from the U.S.), may face increased operational expenses. However, a shift towards offshore services could partially offset these costs, benefiting Indian IT companies in terms of cost control.

Opportunities for Indian Exports

With the “America First” policy, Trump could introduce protectionist measures to shield the U.S. economy. Higher tariffs on Indian goods would put pressure on exporters. Nonetheless, his tough stance on China might open doors for Indian exporters, who could capture some of the U.S. market share currently held by China. If Trump were to relax labor and environmental regulations, this could also be favorable for Indian exporters. Additionally, India's geopolitical alignment with the U.S. might strengthen, positioning India as a reliable alternative supplier.

Ajay Srivastava, Founder of Global Trade Research Initiative

Stronger Tech Ties

The technology sector plays a vital role in U.S.-India trade. According to Nasscom Chairperson Sindhu Gangadharan, cooperation in emerging fields such as artificial intelligence (AI) and cybersecurity is likely to grow. India’s IT sector contributes around $80 billion to the U.S. GDP, and the two countries’ tech partnership is set to deepen.

Reinforced Trade Relations

U.S.-India cooperation is expanding across climate change, technology, space, and defense. According to Indian Union Minister Jyotiraditya Scindia, the rapport between Prime Minister Narendra Modi and President Trump could further strengthen this collaboration.

Jyotiraditya Scindia, Indian Union Minister

Potential Tariff Increases

If Trump pursues his “Make America Great Again” agenda by increasing tariffs on imports, sectors like electronics might face steep challenges. This could hinder Indian exports in certain industries, necessitating an exploration of alternative markets.

Visvajit Dhar, International Trade Expert

Cautious Trade Policy

According to Ajay Sahai, Director General of the Federation of Indian Export Organizations (FIEO), Trump may seek a balanced approach, but there’s potential for increased trade disputes due to tariffs. Stricter visa rules could also emerge, affecting the flow of skilled Indian professionals to the U.S.

Ajay Sahai, FIEO

Expanding Markets

Indian exporters in sectors like textiles, chemicals, pharmaceuticals, vehicles, and engineering could face higher tariffs under the Trump administration. India should not only safeguard its trade interests with the U.S. but also actively pursue new markets to minimize any adverse impacts from American policy shifts.

Agneshwar Sen, EY India