What Donald Trump’s second term as US President could mean for India – trade, strategy, and geopolitics

Republican nominee Donald Trump on Wednesday claimed victory in the US Presidential elections after Fox News projected him as the winner of the race to the White House.

Other prominent news outlets in the US are yet to call the race in Trump's favour, even as the former US President was inching towards securing a second term to Oval Office by defeating Democrat Kamala Harris.

Prime Minister Narendra Modi was among the first global leaders to congratulate Trump for his victory. “Together, let’s work for the betterment of our people and to promote global peace, stability and prosperity,” Modi said in a post on X.

Modi-Trump friendship

In September 2019, then-US President Donald Trump hosted Prime Minister Narendra Modi in Texas at an event attended by an estimated 50,000 people. The ‘Howdy, Modi!’ event in Houston was billed as one of the largest-ever receptions of a foreign leader in the US.

A year later, Modi welcomed Trump in his home state of Gujarat for an event attended by over 120,000 people. Trump lost the US Presidential Election 2020 to Joe Biden.

Four years later, Trump, 78, is all set to return to the White House after what is being billed as an unprecedented victory in the US Presidential Election. How will it impact India? Mint takes a look.

Analysts view Trump as more favourable for India than Harris could have been. This precisely because of his anti-China and pro-Russia positions. But then, there are concerns too, especially regarding possible challenges for India in trade and tariffs during a projected Trump presidency.

The Key Sectors

The impact on India can be largely broken down into five sectors – the strategic partnership, the immigration factor, the regional stability, trade and tariffs and the economic impact.

• Regarding strategic issues between the two countries, Trump might as well continue to emphasise a US-India partnership in areas such as defence and counter-terrorism, considering the shared interest in countering China. India-US relations are often seen through the common China prism.
• The US will likely see changes in economic policies with a change in guard, if Trump is elected. This will certainly have a ripple effect on the Indian economy, especially in the manufacturing and technology sectors.
• Trump has been the flagbearer of the ‘America First’ policy. His protectionist approach could impact trade and tariff agreements between the two countries, though analysts suggest some focus could be on strengthening ties. Trump’s presidency could, some experts said, reignite trade wars, especially with China and India. He had labeled India as a significant trade abuser in his last term as US President.
• Like in his first term as US President, Trump's immigration stance could not favour the Indian workforce, particularly the H-1B visa policies.
• In case of an aggressive stance in South Asia, a possible Trump administration could have implications for India’s relations with Pakistan and China.
• Experts also see an impact on Indian rupee. His economic policies could strengthen the dollar, resulting in volatility for the Indian Rupee, the analysts said.

Trump’s first term (2017-2021)

India-US relations significantly transformed during Trump’s first term as US president between 2017 and 2021. The four Trump years were marked by robust engagement, focusing on strategic partnerships and shared geopolitical goals, considering China’s increasing presence in South Asia.

PM Modi’s visit to the US in 2019, followed by a state visit to India by President Trump in 2020, symbolised the enhanced bilateral relationship between the two countries.

India and the US deepened their defence ties through various agreements, including the Communications Compatibility and Security Agreement (COMCASA) in 2018. Both nations showed commitment towards combating terrorism.

The revival of the Quad involving the US, India, Japan, and Australia turned out to be an important initiative for regional security, countering China's influence in the region.

Trade relations, however, saw ups and downs during Trump’s first term. Trump has called India a 'tariff king.' In fact, in May 2019, he terminated India's preferential market access – the Generalised System of Preferences – to the United States, accusing India of not giving the US reasonable access to its markets. He also raised import duty on Indian steel and aluminium products.

Beneficial for India?

A recent report by global financial services group Nomura said another term for President Donald Trump will be beneficial for India. 

The report said a possible friction in bilateral trade due to Trump’s policies could be outweighed by supply chain benefits. India will be a relative beneficiary due to its domestic demand-driven growth model and benefits from lower commodity prices, supply chain shifts, and foreign policy.

"India and the US share deep economic and strategic interests that are unlikely to be compromised, irrespective of the election outcome," the report says.