Come September, global futurists are scrambling to anticipate how a second term of Trump’s Presidency bodes for the world and India. According to the latest opinion poll by New York Times, Kamla Harris has a marginal edge over Donald Trump. But, it does not foretell the demise of Trump chances for a second term.
Kamla Harris, though half Indian by heritage, does not augur well for special priority on USA-India relations. The reality lies with the background during the Biden administration, when strengthening of US-India relation was geared by President initiative, rather than Harris’ Indian heritage, the then Vice-President..
It is a mix of concern and comforts, If Trump comes back in power. Trump’s emphatic focus on protectionism is a matter of concern. At the same time Trump’s hard stand against China bodes well for India in the wake of Trump likely using India to counterbalance China in Indo Pacific region.
Donald Trump said he would impose a 10 percent import tariff on all nations and 60 percent on China. His America First policies will get a push to instill confidence of Americanization in every policy where “Every decision on trade, on immigration, on foreign affairs will be made to benefit American workers and American families”, which was outlined during Trump’s first term
Past experiences show a different template. Despite India losing Special Status (GSP scheme) in USA trade policy during Trump’s first term ( 2017-21) and USA harping on non-reciprocal entry, USA continued to be one of the biggest entry of Indian products. It became three times biggest trading partner, with India exporting and importing less.
India exports mainly four products to USA. They were diamonds and jewelry, apparels and textile, oil refinery products and pharmaceuticals.
If Trump imposes 10 percent import tariff, imports of these 4 products groups should be affected. But, the reality lies somewhere. else.
The biggest export item by India to USA is diamond and jewelry. Apparently, import tariff should impact India’s export of diamond and jewelry. But, there is a catch. India has an edge over its competitors, such as Israel and Belgium. India is the largest cutting and polishing centre of rough diamond in the world. US bridals prefer for customize design of India.
Similarly, Indian pharmaceutical industry play an important role in US market. According to a report, Indian companies account for about 47 percent of generic prescriptions filed in USA by 2022.
The core issue of trade partnership with USA is that India continued to be the surplus trade partner, despite Trump’s protectionist policy.
Notwithstanding these contentious issues, India’s exports to USA spurred during the Trump period. In other words, India’s export to USA remained resilient despite Trump’s withdrawing of Special status to India.
During 2017-18 to 2020-21, India’s export to USA jumped by over 59 percent. Its surplus trade balance widened further from US$21.3 billion in 2017-18 to US$ 22.8 billion in 2020-21.
Indo-Pacific region will emerge an important pivot in Trump’s second term , which will showcase a turning point of Trump led USA –India relation. USA will play key role in the newly formed IPEF( Indo Pacific Economic Forum). In this new dynamics, where India will also sit in the driver seat, USA-India relation will witness a different template.
India will have to brace for two challenges with new Trump’s America First strategy. First, trade and second immigration.
Given India’s protracted surplus trade with USA, it is obvious Trump administration will press hard on balancing trade surplus with India. Trump’s administration will press for stringent non-reciprocal entry in USA. This means Trump will enforce India to import more from USA to counter balance the surplus. Currently, major items of imports from USA are oil refinery goods and edible products like nuts.
More important issue will be restriction on immigration. During the first term, Trump administration blocked visas for wide variety of jobs for non-Americans, including those for computer programming and other skilled workers under HI-B visa. Stephen Miller, the architect of Trump immigration policy has restricted the immigration, arguing that they harm employment prospect of Americans.
India is the biggest beneficiary of HI B visa. Annually, more than 70 percent of HI B visa is issued to Indian applicants. Trump administration will surly lay down restriction on India’s IT professionals entry in USA to protect the Americans for jobs.
Another important issue , which attracts attention against Trump’s conservative policy is that during his first term US investment in India boomed. It increased five times in India – from US$ 2.1 billion in 2017-18 to US$ 10.5 billion in 2021-22. This demonstrates Trump’s wide outlook to promote American investment in India in lure of big domestic market and a far reaching bigger role in Indo-Pacific region.
Given these, Trump’s returning back in power does not bode ill to India. With upcoming of IPEF (Indo Pacific Economic Forum), which let USA to play Big Brother role to counterbalance China and Indian Prime Minister Narendra Modi taking the driver seat, Trump’s administration is likely to be more moderate than before.
