Trump's Second Term: The Looming Threat of Tariffs
US President Donald Trump's aggressive stance on global trade, including the threat of significant tariffs, has raised significant concerns. Trump's rhetoric suggests that India could face new challenges as the US seeks to protect domestic industries and assert its global influence.
One key aspect of Trump’s trade policy is his strong opposition to de-dollarisation efforts within the BRICS, which includes India. While the BRICS bloc has explored alternatives to the US dollar in trade, Trump has warned of a 100 percent tariff on trade with these nations if they attempt to move away from the dollar’s dominance. Though India has a smaller trade deficit with the US compared to China, the impact could still be significant. Much of India’s exports, including textiles, pharmaceuticals, and IT services, are tailored to American demand. A sharp tariff on Indian goods could disrupt trade, harming US consumers in the short term, but in the long-term, India might struggle to diversify its markets quickly enough.
Trump's administration has also criticised India’s high tariffs on American goods like motorcycles, electronics, and agricultural products. With his "America First" approach, Trump may push for a more reciprocal trade policy. If India maintains high tariffs, the US could retaliate by increasing tariffs on Indian exports, possibly sparking a trade war that would especially impact India’s growing export sector.
Another concern for India is the potential tightening of immigration policies under Trump. The administration has previously targeted high-skilled foreign workers, particularly through restrictions on the H-1B visa program, which many Indian professionals rely on. While this wouldn’t directly impact trade, it could strain the broader economic relationship between the two nations, especially in India's technology sector, which heavily depends on the program.
India could also face increased US pressure to stop importing crude oil from Russia and Iran. While the US has already imposed sanctions on these countries, India has been importing oil from them due to favorable pricing. If US pressure intensifies, India could find itself caught between meeting its energy needs and risking its trade relations with the US.
Thus, protectionist policies, trade tariffs, immigration restrictions, and energy pressures will challenge India to balance its economic interests with the unpredictable nature of US policies.
