As former US President Donald Trump returns to the political arena, India is watching closely. Trump’s business-centric approach to politics and his strong rapport with Prime Minister Narendra Modi have influenced the India-US relationship significantly, yet his policy preferences create both opportunities and challenges. Should Trump secure a second term, his administration’s policies on trade, immigration, and defence could shift India’s economic and geopolitical landscape.
Trade Relations: Friend or Foe?
Trump’s stance on trade is famously “America First,” and his policy on tariffs could create headwinds for Indian industries heavily reliant on the U.S. market. His previous presidency was marked by labelling India a “tariff king” and criticizing what he deemed as unfair trade practices. In recent remarks, Trump reaffirmed his intent to implement a “reciprocal tax” system if re-elected, which could significantly impact Indian exports, particularly in sectors like IT, pharmaceuticals, and textiles.
The US is India’s largest export market, and any imposition of tariffs could challenge India’s trade balance and impact these sectors. However, Trump has also openly praised Modi, suggesting that a personal connection between the two leaders could facilitate negotiations.
The potential for heightened trade friction is underscored by a Nomura report, which suggests that while Trump’s policies may initially strain India-US trade, they could also provide opportunities. As the US continues its “China Plus One” strategy, aimed at diversifying supply chains away from China, India may attract more investment and trade as an alternative manufacturing hub.
Immigration: Impact on India’s Workforce
Indian professionals, particularly those in the tech sector, could face challenges under Trump’s immigration policies. His first term saw increased restrictions on the H-1B visa program, which disproportionately impacted skilled Indian workers. Trump’s “hire American” stance led to proposals for higher wage requirements and stricter eligibility for visa holders, aiming to prevent the displacement of American workers.
Should these policies resurface, it would directly impact Indian tech companies and professionals, as the H-1B visa is crucial for the Indian IT industry’s operations in the US Jaishankar, India’s External Affairs Minister, commented that trade and immigration will likely be areas of “difficult negotiation” under a Trump administration. Tighter visa regulations could strain India’s tech sector and limit the Indian workforce’s access to US-based opportunities.
However, Trump’s restrictive approach might also drive Indian tech companies to consider expanding domestically or exploring other markets, potentially boosting India’s local tech ecosystem.
Strategic Defence Cooperation: Countering China Together
The shared India-US vision of countering China’s influence has strengthened bilateral defence ties, particularly through the Quad alliance. Trump’s previous term saw increased military cooperation, with high-profile events such as “Howdy Modi” and “Namaste Trump” showcasing the partnership. Under Biden, defence collaboration continued with initiatives like the Critical and Emerging Technology (iCET) framework, yet Trump’s unique stance on foreign alliances could alter the dynamics.
Trump has expressed scepticism toward NATO and multilateral defence pacts, suggesting he may approach military alliances with caution. Yet, India-US defence cooperation might still thrive due to a mutual focus on the Indo-Pacific region. Defence sales, technology transfers, and joint exercises are likely to remain key components of this relationship, as both nations seek to limit China’s regional dominance.
If Trump adopts a more protectionist defence approach, India may need to navigate US military deals carefully. However, the Quad—an alliance between the US, India, Japan, and Australia—stands as a robust counterbalance to China. A Trump administration could push for further arms sales and technology transfers, enhancing India’s military capabilities in the face of regional threats.
Economic and Industrial Impacts: From Manufacturing to Metals
Trump’s inclination to reduce US reliance on China offers India a significant economic opening. Many American companies have already begun seeking alternatives to Chinese manufacturing, a trend that could accelerate if Trump returns to office. A report by JM Financial Institutional Securities notes that if Trump enforces additional tariffs on Chinese imports, India could benefit from the “China Plus One” strategy in sectors like auto components and chemicals.
Indian manufacturers in fields like electronics and auto parts stand to gain from US companies shifting supply chains, though they might need to enhance their presence in the U.S. market to capitalize on this shift. Likewise, Trump’s stance on Chinese tariffs could benefit Indian metal exporters. However, potential price instability caused by global trade disruptions could affect long-term profitability for these sectors.
The textile industry, particularly India’s ceramic tile sector, could also see increased demand as US buyers seek alternatives to Chinese goods. While Trump’s economic policies could bring new opportunities, Indian exporters will need to adapt to the evolving trade landscape to maintain stability.
Energy and Technology: Expanding Partnerships
Trump’s relationship with Modi and his focus on building energy independence could further deepen US-India energy partnerships. During his first term, Trump emphasized energy exports, particularly liquefied natural gas (LNG), and India is a significant importer. Expanding this relationship could support India’s energy needs while strengthening ties with the US.
In technology, Trump’s policies to reduce reliance on Chinese tech firms, especially in telecommunications and cybersecurity, align with India’s own moves to limit Chinese influence. For India, collaborating on emerging technologies, including 5G, cybersecurity, and space, could be advantageous under a Trump administration, especially if the U.S. looks to diversify partnerships in Asia.
Balancing Opportunities and Challenges
A Trump victory in the 2024 US election holds mixed prospects for India. On one hand, Trump’s friendship with Modi and shared concerns over China create alignment in defence, energy, and technology sectors. India’s role in the “China Plus One” strategy opens doors for investment and trade diversification, especially as US firms seek to reduce Chinese dependencies.
On the other hand, Trump’s “America First” agenda, particularly in trade and immigration, presents challenges. Increased tariffs and stricter H-1B policies could pressure India to adapt its economic and workforce strategies. Balancing these challenges with strategic gains will require adept diplomacy and continued partnership-building.
For India, Trump’s potential second term offers both challenges and openings to redefine the bilateral relationship. If managed well, India can emerge as a stronger partner in global trade and security—an outcome that serves both nations amid a shifting geopolitical landscape.