A win that will affect the global economy

Context: The return of
Donald Trump as President of the world’s largest economy accounting for more
than a quarter of the global GDP could mean a multiplicity of shifts, some of
them detrimental, for several key economies, including India. It would mean a
return to escalating trade wars; a continuation of economic protectionism;
jettisoning multilateralism; and imposing restrictions on immigration into the
U.S., which could hinder India’s IT services sector. Trump has also pledged to
raise oil and natural gas drilling, which would mean that the U.S. would once
again retreat from its climate goals. This would most likely also alter global
supply chains as the EU continues to attempt to move away from depending on
Russian LNG, which has already reduced from 40% in 2019 to 15% in 2024.

Key points

·      
Overview: Donald Trump’s return to
the presidency is making headlines for several reasons, reflecting both the
implications of his policies and the broader impact on U.S. society and global
geopolitics.

·      
India-U.S. engagement: Economic and
Trade Policies- Trump’s protectionist “America First” agenda may lead to
higher tariffs on Indian goods, particularly in textiles, pharmaceuticals, and
automobiles. This could strain trade relations, as India relies heavily on
exports to the U.S. Stricter Immigration policy changes to H-1B visa
regulations could significantly impact India’s IT sector, raising costs for
Indian firms that depend on access to the American labour market.

Strengthened Défense
Ties- Trump is expected to maintain strong defence cooperation with India
through frameworks like the Quad (with Japan and Australia), and with India’s
security needs against China. India may benefit from increased U.S. support in
countering Chinese actions in the Indo-Pacific region.

·      
H1-B Visa Issue: H-1B visa is a
non-immigrant visa that allows American companies to employ foreign workers in
speciality occupations that require theoretical or technical expertise. Under
President Trump, who severely curtailed the visa regime, owing to his policy of
“America First”, India had suffered the most.

·      
Impact on world economy: The radical
economic outlook presented by Donald Trump includes plans to impose a 20%
tariff on all imports and more than 200% duty on cars; a proposal to deport
millions of irregular immigrants; and to extend tax cuts at a time when the US
budget deficit is at record high.

·      
Way forward: India might need
to navigate a complex landscape as it balances its longstanding ties with
Russia against growing relations with the U.S., especially if Trump adopts a
less confrontational stance towards Russia compared to previous
administrations.