Republican Presidential nominee Donald Trump’s call for increased onshoring may challenge India's efforts to attract American businesses in expanding capacity in India. The uncertainty around Trump’s political stance on China, should he assume the White House for a second term, is another potential headache for India.
As the election campaigning hits the final crescendo in the US and the two Presidential candidates in the fray - Donald Trump and Kamala Harris - spell out their visions for America, India is closely reading the statements from both, specifically around China and India.
“India is a very tough country. It’s not only China. China, I would say probably say the toughest.. we are going to bring the companies back. We are going to lower taxes still further for companies that are going to make their products in the USA. We are going to protect those companies with strong tariffs because I am a believer in tariffs,” former President and Republican Presidential Candidate Donald Trump recently said at a rally in Washington DC.
Trump has explicitly stated that the United States, if he were to become President, would impose 60% tariffs on Chinese imports into the country. He has also threatened India with higher tariffs. From a business perspective, a Trump administration will push for onshoring, nearshoring and then friendshoring. Trump's priorities imply incentivizing businesses to bring manufacturing back to America, followed by taking manufacturing to countries geographically close to the United States such as Mexico, and then allowing US businesses to expand capacities in nations that are ‘Friends of the United States’.
In the recent months, US tech giant Apple has made an aggressive push to expand manufacturing and sales in India. Apple now reportedly makes one in seven, or 14% of its iPhones in India.
Tanvi Madan, Author of Fateful Triangle and Senior Fellow at the Foreign Policy Program at Brookings Institution explains that China has been a major driver of various aspects of the India-US relations. “From defence, security, economic policy, unprecedented technological cooperation under the Biden administration, there will be a diversification from friendshoring,” Madan told Moneycontrol.
It’s also Trump’s unpredictable foreign policy stance that could be a cause of concern for India. While President Harris may offer more continuity – Biden administration has passed orders restraining US investments into China, and Chinese investments into the United States. An Executive Order signed by Biden restricted outbound investments to China, Hong Kong and Macau in areas deemed critical to US national security. These included industries such as advanced computing chips, micro-electronics and artificial intelligence.
The lingering concern is that Trump could go either way on matters of foreign policy. “If Xi offers Trump something on trade, or North Korea finds a way to make some concessions to the US, you might actually see President Trump having a more accommodative view about China,” said Tanvi Madan.
"We have seen when China thinks they can manage a US President, they push other countries, particularly countries that are not allies."
The Chinese are not comfortable about the growing relations between India and the US. “The basic trajectory of rivalry will remain.. unless something unpredictable comes from the US,” Ashok Kantha, former Ambassador of India to People’s Republic of China told Moneycontrol.
So far, both candidates have favoured close, strategic ties between the US and India. But US and India are not allies, given that there are areas of diversion. How China features in this relationship will be determined by the next President of the United States.
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