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11-11-2024
Bureau Report
NEW DELHI: During his campaign for re-election, Donald Trump repeatedly threatened major tariffs on imports from a range of countries. Beijing bore the brunt of his attention, he threatened a 60 percent tariff on Chinese products. But India was a major target, too he described the country as a “major charger” of tariffs, and promised to do the same in return.
Now, as Trump prepares to take office again after a stunning win over Vice President Kamala Harris in the US presidential election, his plans for trade barriers and his anti-immigrant rhetoric threaten to inject tensions into bilateral relations with India.
The US is India’s largest export destination and consistently ranks among its top two trade partners.
“India-US relations could actually get strained if all these election promises that Trump made are implemented,” said Biswajit Dhar, a distinguished professor at the Council for Social Development, New Delhi. “If he goes through with them, this will be very, very bad news for India” but there is a ray of hope said Dhar: Prime Minister Narendra Modi’s personal “bonhomie” with Trump could help New Delhi navigate an otherwise bumpy road ahead.
US-India trade last year amounted to nearly $120bn, with a surplus of $30bn for India. Bilateral trade has shot up by 92 percent in the last decade. Now, Trump’s “America First” agenda which aims to offset domestic tax cuts by imposing higher tariffs on imports could disrupt that relationship.
While higher tariffs may end up raising the cost of imported goods for US customers, it could also hurt key Indian export-oriented industries, from information technology and cars to pharmaceuticals.
Analysts at the London School of Economics have predicted a GDP loss of 0.03 percent for India, and 0.68 percent reduction for China. “India would be among the hardest hit because the US is our largest market. That’s the source of our biggest concern,” said Dhar, the international trade expert. “During the first term, Trump got into this whole ‘protectionist mode’, but upon his return this time, he will come knowing that he has gotten a mandate for these policies.”
Underlying trade tensions between the US and India, because of the imbalance in their trade with India the dominant exporter have largely stayed under wraps for the last four years under the Biden administration, said Michael Kugelman, director of the Washington, DC-based Wilson Center’s South Asia Institute but “the tensions could rise to the surface now and explode in the new Trump administration.”
Walter Ladwig, a senior international relations lecturer at King’s College, London, agreed that “trade has always been a difficult issue in bilateral relations” and remained “front and centre” during the earlier Trump years.
Unlike Biden’s “friend-shoring approach” for key high-tech items like semiconductors, Ladwig said, “It is hard to see Trump supporting efforts to build such items anywhere outside the US.” Friend-shoring refers to the concept of encouraging companies to move from rival countries like China to friendly nations.
As India tries to build strong ties with a new Trump administration, it will be confronted by an unlikely reality, said Anil Trigunayat, a senior Indian diplomat who has served as an Indian trade representative in New York: “America is trying to grow more isolationists and at the same time, Delhi is trying to grow more globally cooperative.”
Trump’s first shot at the US presidency was marked by anxiety for H-1B visa holders, a programme for skilled foreign professionals seeking employment in the country. Indians represent the majority of these visa holders, accounting for 72.3 percent in the last year. Chinese workers are a distant second, with 11.7 percent.
