With Donald Trump set to be inaugurated for a second term on January 20, 2025, the future of India-US relations will enter a new phase, one that promises both opportunities and significant challenges. Prime Minister Narendra Modi and Trump share a personal rapport that has driven the bilateral relationship forward, but Trump’s distinct America First policies will continue to shape economic, security, and diplomatic engagements between the two nations.
While the strong personal bond between Modi and Trump is expected to help maintain a positive working relationship, the evolving geopolitical dynamics, particularly with regard to China, trade imbalances, and defense cooperation, could redefine the contours of this partnership. Here’s a look at the key areas where the Modi-Trump relationship will be tested and transformed during Trump’s second term.
Trade Relations: Navigating Tensions and Opportunities
Trade will remain a major focal point under a second Trump administration. Trump’s “America First” agenda has historically led to protectionist policies and a sceptical view of multilateral trade agreements. His administration has repeatedly criticized countries, including India, for unfair trade practices, notably in sectors such as information technology and pharmaceuticals. During his first term, Trump referred to India as a “tariff king” and imposed tariffs on a variety of products. The issue is likely to resurface in his second term, as Trump remains committed to a reciprocal tax system that could have implications for India’s trade balance.
India, which counts the US as its largest export market, could face heightened trade barriers, especially in the IT sector, textiles, and pharmaceuticals. However, India’s pivotal role in the “China Plus One” strategy — a policy aimed at diversifying global supply chains away from China — may provide India with opportunities to expand its manufacturing base and increase exports to the US. If the US seeks to shift supply chains out of China, India could emerge as an alternative manufacturing hub.
Moreover, the personal connection between Trump and Modi could allow for smoother negotiations and possibly a more flexible approach to trade disputes. While tariff concerns are unlikely to disappear, India’s strategic importance in the Indo-Pacific could provide leverage to reduce trade friction.
Immigration: Repercussions for Indian Tech Workers
One of the more contentious issues during Trump’s first term was his approach to immigration, particularly his restrictions on the H-1B visa program, which is crucial for Indian tech workers. Trump’s administration implemented policies aimed at limiting the flow of foreign skilled workers to the U.S., a move that particularly affected Indian professionals in the IT and tech sectors.
If these policies resurface in Trump’s second term, it could be a significant challenge for India’s technology ecosystem. Indian IT firms that rely on sending workers to the U.S. could face difficulties in securing work visas, which would affect their ability to scale operations and meet the demand of U.S. clients. Furthermore, Indian workers who rely on the H-1B visa to work in the US could see their opportunities diminished if Trump’s administration implements even more restrictive visa policies.
However, this could also spur India to further develop its domestic technology ecosystem, fostering innovation and job creation within India. Moreover, the Trump administration’s interest in artificial intelligence (AI) and emerging technologies could provide opportunities for collaboration between Indian and American tech companies, especially with India’s growing capabilities in AI and cybersecurity.
Strategic Defense Cooperation: A Shared Focus on China
One area of continuity in a second Trump administration is likely to be the strengthening of defence ties between India and the U.S., especially as both countries seek to counter China’s growing influence in the Indo-Pacific. Trump’s first term saw a significant uptick in military cooperation, including arms sales, military technology transfers, and joint defense exercises. The Quad — a strategic grouping of the U.S., India, Japan, and Australia — was revitalized under Trump and remains a cornerstone of the Indo-Pacific security architecture.
In his second term, Trump is likely to continue his support for defense collaboration, with an emphasis on enhancing India’s military capabilities. India could see increased sales of defense equipment, particularly naval assets, as both countries focus on containing China’s maritime assertiveness. Furthermore, intelligence sharing and space cooperation could intensify, as both countries seek to maintain technological superiority in the region.
However, while defense ties will continue to deepen, Trump’s “America First” doctrine could also place pressure on India to assume a greater share of the security burden, particularly in the Indian Ocean region. India, while committed to regional security, may push back on any attempts to push it into a more confrontational posture against China.
Energy and Technology: Collaborating on Emerging Frontiers
Energy cooperation is another area where India and the U.S. can deepen ties under a second Trump administration. Trump’s first term saw an emphasis on energy independence and the expansion of energy exports, particularly liquefied natural gas (LNG). India, which has growing energy needs, stands to benefit from this relationship as the U.S. becomes a larger supplier of energy resources to the Indian market.
In the technology sector, both nations share concerns over Chinese dominance in areas like 5G and cybersecurity. Trump’s push to reduce reliance on Chinese telecom giants like Huawei could dovetail with India’s own efforts to curb Chinese influence in its telecommunications industry. This creates an opportunity for the U.S. and India to work together on emerging technologies like 5G, artificial intelligence, and space exploration.
The Way Forward: A Delicate Balancing Act
As Trump’s second term begins, India faces a complex landscape of opportunities and challenges. On the one hand, a strengthened defense partnership, increased trade with the U.S., and deeper collaboration in emerging technologies can help India secure its position in the Indo-Pacific and bolster its economic growth. On the other hand, protectionist trade policies, immigration restrictions, and geopolitical tensions with China could complicate India’s ability to fully capitalize on these opportunities.
For Prime Minister Modi, managing this delicate balancing act will be crucial. India must navigate its strong strategic partnership with the US while maintaining its strategic autonomy. The relationship with Trump will demand pragmatic diplomacy, with a focus on aligning interests, particularly in countering China, while managing the domestic challenges posed by trade barriers and immigration policies.
In the new era, India’s approach to the US under Trump will likely involve a blend of cooperation and caution, carefully balancing its economic ambitions with the need for strategic flexibility in a rapidly changing world.
