US elections: Less lectures on democracy and higher tariffs likely under President Trump

US elections: Less lectures on democracy and higher tariffs likely under President Trump

It is a very significant moment for India’s geopolitics as Donald Trump gets ready to return as president of the United States. Trump has often spoken about his friendship with Prime Minister Narendra Modi , who also congratulated the president-elect.

“Heartiest congratulations my friend @realDonaldTrump on your historic election victory. As you build on the successes of your previous term, I look forward to renewing our collaboration to further strengthen the India-US Comprehensive Global and Strategic Partnership. Together, let’s work for the betterment of our people and to promote global peace, stability and prosperity,” Modi posted on X.

There is an expectation of more of such friendly and visible overtures between the two leaders. However, as Somnath Mukherjee, managing partner and chief investment officer, ASK Wealth Advisors, explained, “With Trump, the form is vastly different. It is more maverick, impulsive… While he is expected to be mellower this time, India will have to work with that. Differences such as criticism over democracy with Trump will be more muted… With (Democratic candidate Kamala) Harris, it would have been sharper.”

Foreign policy

Trump and the Republican Party at large has always been a supporter of stronger India-US relations. Moreover, his strident anti-China stance benefits India. As president in his earlier 2017-21 term, he signed big defence agreements with India and worked towards reviving the Quad—a grouping of Australia, India, Japan and the US seen as a bulwark against China, mainly—for security dialogue. When Trump came to India in 2020, what he termed a “very productive visit”, the two countries signed deals in defence, energy and telecom. India agreed to buy attack helicopters and other US military equipment worth $3 billion, and the two countries pledged to work together to make 5G telecom technology safer. Deepening of energy ties and the fight against Islamic terror were also part of the joint declaration. However, the divide on trade tariffs remained unbridged, and was subsequently taken up and addressed by the succeeding Joe Biden administration.

Overarchingly, the Biden administration’s relationship with India was a productive one, and the overall bonhomie is likely to continue between the two countries. However, there are undercurrents of heightened protectionism that Trump has professed on several occasions. This is something that has manifested earlier. In June 2019, when Trump was in power, the US ended preferential trade status for India. India imposed retaliatory tariffs on 28 US products. This was somewhat resolved under Biden in 2023.

Still, there are silver linings. “In the broad sense, China will remain America’s primary adversary and that helps India,” Mukherjee pointed out.

Jayant Dasgupta, former Indian ambassador to the World Trade Organisation, too underlined that Trump is strongly anti-China. “The way the Chinese have got into US manufacturing, Trump is going to come hard at China. Trump will raise the heat on China. If Chinese exports to the US become more difficult, India will get that opportunity,” he said.

The other perceived US foe is Russia. India has maintained a neutral stance on the war between Russia and Ukraine and has continued its policy of buying cheaper oil from Russia despite sanctions, a move that has not gone down too well with the West. But Trump and Russian President Vladimir Putin have a relationship of what experts refer to as mutual admiration. Trump has also pledged to end the war on Ukraine in one day, which the Kremlin hopes would translate into territorial concessions by Kyiv.

Overall, the relationship between Putin and Trump could thaw some of the stiffness that has set in among western countries over India’s stance on the Russia- Ukraine situation.

On trade, Trump’s economics could have a wide-ranging impact. The Republican has come down heavily on American companies offshoring to even neighbouring Mexico, and this could have a deleterious effect on inflow of US investments to India. Services exports are a big part of India’s IT sector revenues. Heightened protectionism in the US, the biggest consumer of Indian tech services, could mean a big hit to local IT companies. Moreover, Trump’s hard stance on immigration could lead to a reduction in the number of H-1B visas.

On the other hand, the China+1 strategy could get a significant boost but India will have to step up to take advantage of the opportunity.

Also, expect Elon Musk’s satellite internet service Starlink to become a big part of the discussions between the two countries.