Trump 2.0: India’s Challenges and Opportunities in a Changing World

Geeta Singh

Donald J Trump, poised to return as the 47th President of the United States, has reignited his “America First” agenda. His approach is expected to shape geopolitical dynamics, particularly with India and China

Donald J Trump, poised to return as the 47th President of the United States, has reignited his “America First” agenda. His approach is expected to shape geopolitical dynamics, particularly with major players like India and China. On his first day in office, Trump signed several executive orders addressing climate change, environmental policies, and healthcare. Among these, his plans to withdraw from the 2015 Paris Agreement, as he did in 2017, signal a strong stance on climate-related commitments. His administration also intends to reinstate policies cutting federal aid to international groups providing abortion counseling, a move that could impact global health programs.

After US President Donald Trump signed an executive order on his first day in office, mandating that all foreign assistance must align with US foreign policy, the US mission in India has begun a review to ensure their existing grants comply with this directive. This review is expected to affect long-standing programs related to the environment, health, and other initiatives run by the US embassy and USAID in India.

U.S.-India Relations

Trump’s second term promises to strengthen the U.S.-India partnership. The Quadrilateral Security Dialogue (QUAD), comprising the U.S., India, Japan, and Australia, will likely play a key role in countering China’s influence in the Indo-Pacific region. This aligns with Indian Prime Minister Narendra Modi’s “Viksit Bharat” vision, creating new avenues for collaboration in strategic and commercial areas. During FY 2023-24, U.S.-India bilateral trade stood at $128.78 billion, with India enjoying a trade surplus of $35.3 billion. For two consecutive years, the U.S. has been India’s largest trading partner. Furthermore, the U.S. is India’s third-largest investor, with cumulative FDI inflows of $62.24 billion as of September 2023.

While Trump’s presidency emphasized fair trade practices, it also brought challenges. His administration sought to address the U.S. trade deficit with India, which previously stood at $24 billion. This led to tough negotiations but also opened doors for progress. For example, Indian pharmaceutical exports to the U.S. benefited from consistent demand, with generics valued at nearly $6 billion annually. India also relaxed some agricultural trade barriers, allowing American exports such as almonds and apples to enter its markets. Additionally, the Trump administration promoted energy exports, making the U.S. a key supplier of crude oil and liquefied natural gas (LNG) to India. Despite occasional friction, these developments strengthened the Indo-U.S. trade relationship.

U.S.-China Rivalry

Trump’s stance on China remains firm, focusing on economic decoupling and containing Beijing’s growing influence. Sweeping tariffs could raise cumulative rates on Chinese imports by 35%, potentially reaching 60%. His proposed tariffs on European, Asian, and Mexican imports aim to protect U.S. markets while generating additional revenue. Beyond trade, Trump plans to address issues like fentanyl imports and border security, further shaping global trade dynamics.

China, on the other hand, is recalibrating its relationships with countries like Japan and India, leveraging Trump’s return to strengthen its diplomatic ties and counter the U.S.-led international order. While tensions between Trump and Chinese President Xi Jinping persist, both leaders have expressed a willingness to maintain dialogue on trade, fentanyl, and technology issues.

India’s Diplomatic Balancing Act

India’s diplomatic agility is key to maintaining strong ties with both the U.S. and China. Recent visits by Foreign Minister Jaishankar to the U.S. and Foreign Secretary Vikram Misri to China highlight India’s efforts to engage constructively with both powers.

For India, Trump’s second term presents a complex balancing act. The U.S.’s aggressive stance on tariffs and trade policies, including potential 100% tariffs on BRICS nations, creates uncertainties in global trade. As a BRICS member, India faces potential disruptions and must proactively navigate these challenges. To mitigate risks, India is working on preemptive strategies, such as lowering tariffs and strengthening domestic manufacturing, to protect its export sectors and economic interests.

India’s diplomatic agility is key to maintaining strong ties with both the U.S. and China. Recent visits by Foreign Minister S Jaishankar to the U.S. and Foreign Secretary Vikram Misri to China highlight India’s efforts to engage constructively with both powers. Strengthening the QUAD partnership, diversifying economic ties, and maintaining strategic flexibility will be essential for India to navigate this evolving geopolitical landscape.

In conclusion, Donald Trump’s potential second term introduces opportunities and uncertainties for global trade and geopolitics. For India, the focus must remain on deepening its partnership with the U.S. while managing the challenges of a polarized global order. India can protect its economy and global position by staying strong and using its diplomatic skills to handle the challenges around it.