Trump’s protectionism vis-à-vis India

Context: During his campaign, Trump proposed a 60% tariff on Chinese imports and
an additional 10% tariff on all Chinese products, along with a 20% tariff on
goods from other countries. This significant difference of 60% for China versus
20% for others has created more chances for Indian products to compete in the
US market. The United States remains India’s largest trade partner, with
bilateral trade reaching $120 billion in FY24, slightly exceeding India’s trade
with China. India ranks sixth globally with a $36.8 billion increase in
exports, driven by growth in electronics, pharmaceuticals, and engineering
goods. f India develops a supportive ecosystem, e-commerce exports could grow
to $200-250 billion by 2030.

Key points

·       Overview: With Donald
Trump securing a second term as President of the United States ‘Trump 2.0,’ the
dynamics of US-India trade relations are poised for significant shifts with
renewed focus on his ‘America First’ policies, which are expected to impact
various sectors of the Indian economy.

·       Economic
Interests: Both India and the US share a pro-business stance and a focus on
economic growth, which could drive substantial changes on the global economic stage.
Trump’s ‘America First’ policy, while often seen as isolationist, aligns with
Modi’s ‘Make in India’ initiative, potentially fostering deeper economic ties.

·       Trade
Policies: Trump’s protectionist stance, including higher tariffs on imports, could
pose challenges for Indian exporters. During his first term, Trump was vocal
about reducing the trade deficit with countries like India. For India, this
could complicate trade relations, especially in sectors like IT,
pharmaceuticals, and textiles, which rely heavily on the US market.

·       Trade
Wars and Global Economy: The return of Trump’s aggressive trade policies
could reignite trade tensions with major economies like China and the European
Union. It could disrupt global supply chains and impact economic stability
worldwide. For emerging economies like India, navigating these tensions will be
crucial to maintaining growth.

·       Geopolitical
Dynamics: Trump’s foreign policy, marked by unpredictability and a transactional
approach, could alter geopolitical alliances. For India, this means balancing
its strategic partnership with the US while managing relations with other
global powers like China and Russia.

·       Global
Economic Watch - Fed Policy and China’s Stimulus Package: Two key events
are expected to impact global markets. First, the Federal Reserve’s November
6-7 policy meeting will provide updated inflation insights. Second, China’s
Standing Committee is likely to approve a substantial economic stimulus package
aimed at boosting land purchases, bank recapitalization, and local debt
refinancing.