As the possibility of a second Trump presidency looms, global futurists closely examine what this could mean for the world, particularly for India. Despite Kamala Harris having a slight lead over Donald Trump according to the latest New York Times opinion poll, the outcome of the U.S. presidential election remains uncertain. The potential return of Donald Trump to the White House raises questions about the future direction of U.S.-India relations, with a mix of both opportunities and challenges on the horizon.
Kamala Harris and U.S.-India Relations
While Kamala Harris’s half-Indian heritage might suggest a unique advantage for U.S.-India relations, her past involvement offers a different perspective. During the Biden administration, the strengthening of ties between the U.S. and India was largely driven by President Biden’s initiatives rather than Harris’s heritage or actions as Vice President. This suggests that if Harris were to become President, the focus on U.S.-India relations might not be significantly different from what it was under Biden. As such, Indian policymakers might need to rely more on strategic diplomacy than on cultural ties.
Dual Prospects of Second Trump Term
The potential re-election of Donald Trump brings both concerns and potential comforts for India. On one hand, Trump’s staunch focus on protectionism could pose challenges for India, which has benefited from trade with the U.S. On the other hand, Trump’s firm stance against China could provide India with strategic advantages. India could become a key partner in Trump’s strategy to counterbalance China’s influence in the Indo-Pacific region, potentially enhancing India’s geopolitical clout.
Trump’s previous presidency was marked by a focus on “America First” policies, and his proposed 10 percent import tariff on all nations and a 60 percent tariff on China could significantly impact global trade dynamics. These protectionist policies are aimed at boosting American manufacturing and benefiting American workers and families. While such policies could strain trade relations with India, past experiences show that trade between the U.S. and India remained robust despite similar measures during Trump’s first term.
India’s Export Resilience
Despite losing its Generalized System of Preferences (GSP) status under Trump’s first term, which allowed certain Indian exports to enter the U.S. duty-free, India managed to maintain a strong trading relationship with the United States. The U.S. became India’s largest trading partner, with exports and imports increasing, demonstrating the resilience and adaptability of Indian trade practices.
India’s primary exports to the U.S. include diamonds and jewelry, apparel and textiles, oil refinery products, and pharmaceuticals. These sectors have shown resilience, and India’s competitive edge in the diamond and jewelry market, as well as its strong pharmaceutical industry, has helped maintain its trade position. Indian diamond and jewelry exporters benefit from the country’s status as the largest center for cutting and polishing rough diamonds, meeting the U.S. market’s demand for customized designs.
If Trump implements a 10 percent import tariff, it could impact India’s exports, especially in these key sectors. However, India’s competitive advantages may mitigate the adverse effects. For example, the Indian pharmaceutical industry plays a significant role in the U.S. market, accounting for nearly 47 percent of generic prescriptions filled in the U.S. in 2022. This strong presence suggests that even with higher tariffs, the demand for cost-effective, high-quality Indian pharmaceuticals is likely to continue.
One of the core issues in U.S.-India trade relations is the persistent trade surplus in favor of India. Despite Trump’s protectionist policies, India has managed to maintain and even increase this surplus. Between 2017-18 and 2020-21, India’s exports to the U.S. increased by over 59 percent, with the trade surplus widening from $21.3 billion to $22.8 billion. This indicates that India’s trade with the U.S. is robust enough to withstand protectionist measures.
Indo-Pacific Economic Framework (IPEF)
The Indo-Pacific region is likely to play a crucial role in U.S.-India relations if Trump returns to power. The U.S. is expected to take a leading role in the Indo-Pacific Economic Framework (IPEF), with India playing a significant part. This partnership could mark a new chapter in U.S.-India relations, where both countries work together to ensure stability and security in the region, countering China’s growing influence.
A second Trump term could bring challenges related to trade and immigration. Trump’s administration might push harder to reduce the trade surplus with India by insisting on more reciprocal trade arrangements. This could involve pressuring India to import more American goods, such as oil refinery products and agricultural products like nuts, to balance the trade relationship.
Immigration restrictions could also be a significant concern for India. During Trump’s first term, his administration implemented stringent visa policies, including restrictions on H-1B visas, which are crucial for Indian IT professionals. With more than 70 percent of H-1B visas typically issued to Indians, further restrictions could negatively impact the Indian IT sector and its access to the U.S. market.
U.S. Investment in India
Despite Trump’s conservative policies, U.S. investment in India increased significantly during his first term, rising from $2.1 billion in 2017-18 to $10.5 billion in 2021-22. This increase demonstrates a broader outlook from Trump’s administration, recognizing the potential of India’s large domestic market and its strategic importance in the Indo-Pacific region.
Given these factors, a second Trump presidency may not necessarily be detrimental to India. With the Indo-Pacific Economic Framework (IPEF) providing a platform for deeper cooperation, the U.S. and India could find common ground in countering China’s influence. Moreover, India’s strategic importance as a counterbalance to China may lead to a more moderate and collaborative approach from the Trump administration.
The potential re-election of Donald Trump poses both opportunities and challenges for U.S.-India relations. While Trump’s protectionist policies and immigration restrictions could create obstacles, India’s strong trade ties and strategic importance in the Indo-Pacific region offer avenues for continued partnership. By navigating these complexities, India can leverage its position to maintain robust relations with the U.S., regardless of the outcome of the U.S. presidential election.
