Donald Trump is all set to become the 47th President of the United States of America (POTUS) after the US Vice President Kamala Harris conceded defeat in a chaotic and most polarising presidential election fought bitterly in November 2024. Owing to his good chemistry with him, Prime Minister Narendra Modi was among the first few world leaders to congratulate him on his spectacular victory and expressed his desire to revive his friendship with him and work closely to strengthen India-US relations in several sectors from technology, defence, energy to space.
Knowing Trump from his earlier Presidency days and his policy of America First it is too early to rejoice in what his victory means to India; though, his kind words of appreciation for Indians, especially Hindus, and his strong stand against global terrorism, particularly, Pakistan is very reassuring. His rapport with Prime Minister Modi is an added advantage leading to a better India-US relationship in the coming years. However, some of the areas that are most likely to be affected are listed:
- i) Energy: Trump fired the first salvo today on renewable energy on “day one” of his potential presidency when he talked about offshore wind farms, “we are going to make sure that that ends on day one”. This is an indication that he will make it easier for fossil fuel companies to operate by going easy on existing environmental regulations, in place in America. This may be a first step to unleashing America’s shale gas, oil, and coal reserves to make US energy self-sufficient and reduce dependency on the Organisation of Petroleum Exporting Countries (OPEC). If this happens, then it will be against the global efforts on global warming. While the opening of the US oil sector could lead to price stability, globally, it will also throw open massive business opportunities for Indian oil companies. With no competition from the USA, India may take up the leadership role in the green energy sector as seen in its impressive performance in the country in the last decade. Trump had earlier, vowed to end the electric vehicles mandate, a stand which he softened during 2024 election rallies, and admitted openly that this change of heart was largely due to Elon Musk, Tesla’s CEO endorsement and support for him. This has a message for India that he is flexible if a situation is mutually beneficial.
- ii) Immigration: Trump’s push for Americans to be prioritized for jobs by restricting skilled visas could lead to changes in visa rules, impacting Indian IT professionals. This is not good news for top Indian IT companies that make their billions by using the H1B visa program that allows low-cost skilled Indians to work in the U.S. Over 80 percent of India’s IT export earnings come from the US, making it vulnerable to changes in visa policies. Also, US companies operating in India, for example, Cognizant also send their Indian staff to U.S on these visas since Indians are cheaper to employ as compared to American workers. But his recent statement to welcome highly skilled Indians, especially IITians to US with open arms and his close and friendly relationship with Indian leadership may have less impact relative to immigrants from other countries.
iii) Trade: Trump’s resentment towards trade with China is well known. Earlier, he had threatened to label China as a currency manipulator. He had advocated to impose higher tariffs on Chinese goods and initiate litigation against China for stealing American trade secrets. He even harped on reducing Chinese imports to reduce the record trade deficit with them. A tougher US stance on China could create new opportunities for Indian exporters. While this may benefit India it would also bring tougher trade negotiations between the two countries when Trump pushes trade parity as a part of his America First agenda. If this happens, then Indian exporters may face high customs duties for goods like automobiles, textiles and pharmaceuticals, making Indian products less competitive in the US.
In his earlier term, Trump had accused India a “large tariff abuser” and even labeled it as the “tariff king”. The US is India’s largest trading partner with bilateral trade in goods between the two countries standing at USD 120 billion in 2023-24. India should skilfully leverage its trade in services between the two nations as it has expanded from USD 54.1 billion in 2018 to an estimated USD 70.5 billion in 2024, a 30% rise. Also, India is a key destination for American businesses such as professional, scientific, and technical services, manufacturing, and IT. India buys military equipment and Boeings worth billions of dollars from the US and conducts its over 90 percent global trade in US Dollars. The US firms like Google, and Facebook gather Terabytes of data every day and earn billions of advertising dollars every year from India. Amazon which had to withdraw from China, is the biggest online retailer in India. The US earns dollars from India from various engagements and not just trade. So, India is on a strong footing and it will not be easy for President Trump to push very hard on the trade issue.
- iv) Tax and Economy: Trump’s campaign to bring back economic and industrial activity to US by reducing corporate tax rates in the country to 15% would attract business houses to move back to US. This could affect India as the massive tax cut would more than offset the advantages of cheap labour that India provides to US businesses in India. But this tax cut would also create opportunities for Indian investors with this pro-business outlook. In all likelihood, Trump will not tinker with the EB-5 visa program which is very popular among Indian investors. Under this program, any businessman is required to invest a minimum of $1 million and create at least 10 jobs for American workers. If any entrepreneur can do this in the U.S, they are eligible for a green card. With more than 3 lakh millionaires in India, this would be a great opportunity to get the much coveted and aspirational green card and offset the uncertainties tied to H1B applications.
- v) War and Terrorism: In his victory speech, Trump said, “I am not going to start wars, I am going to stop wars”. Trump has gained a reputation as an anti-war US President. On this issue, Narendra Modi’s and Trump’s views resonate and no surprise if there is a forward movement in ending the Ukraine-Russian and Israel-Iran conflicts that would help the global economy and peace. He has always used strong words earlier, to curtail ISIS and curb immigration from countries that export terror. This would greatly comfort India and will hit its neighbour Pakistan, a leading exporter of terrorism to the world.
- vi) ACA: On the Affordable Care Act (ACA) brought in 2010 by President Barack Obama, popularly known as Obamacare, Trump made a U-turn when he shifted his stand to repeal it and committed to making it better and less expensive in one of the Presidential debate. This brought great relief to the Indian pharma sector as it constitutes the second biggest export of India to the U.S. because of its strength in manufacturing affordable generic drugs. The Financial Year April 2023-February 2024 saw a 15% upward swing in pharma exports to the US.
All these issues will require Trump’s ability to implement the changes that would depend on various factors, including congressional support and potential pushback from states, businesses, and activists. For example, the corporate tax cut would require Congressional approval, which could prove to be a hurdle if at least one of the chambers is controlled by Democrats. Trump’s first bombshell on the fate of green energy has already caused an alarm among renewable energy investors and proponents and has cast a shadow of uncertainty surrounding the energy policy. We need to wait and watch the reaction when the reality dawns upon Trump’s administration when he takes office. A note on Allan Lichtman, Nostradamus of US polls would be in order. He was at a loss for words, post-election results as his prediction that Kamala Harris would win the presidential election went wrong. Looks like the bug of recent Haryana exit polls in India has affected the US Presidential elections, too.