India is betting on the Modi-Trump warm-up to navigate a bleak future with the US | 2024 US Election News

New Delhi, India – In his re-election campaign, Donald Trump has repeatedly threatened large tariffs on goods from various countries. Beijing took a hard line – threatening a 60 percent tariff on Chinese products. But India was also a big target – he described the country as a “big payer” of tariffs, and promised to do the same in return.

Now, as Trump prepares to take office again after the stunning victory of Vice President Kamala Harris in the US presidential election, his plans for trade barriers and his anti-immigrant rhetoric threaten to strain bilateral relations with India.

The US is India's largest export destination and consistently ranks among its top two trading partners.

“The relationship between India and the US could be disrupted if all these election promises made by Trump come true,” said Biswajit Dhar, professor emeritus at the Council for Social Development, New Delhi. “If he continues with them, it will be very bad news for India.”

But there is a glimmer of hope Dhar says: Prime Minister Narendra Modi's “bonhomie” with Trump could help New Delhi navigate the rough road ahead.

Trading prices

US-India trade last year reached nearly $120bn, with India's $30bn surplus. Bilateral trade has grown by 92 percent over the past decade. Now, Trump's “America First” agenda — which aims to end domestic tax cuts by imposing higher tariffs on imports — could disrupt that relationship.

While higher tariffs may ultimately increase the cost of imported goods for US customers, they may also hurt India's key export-oriented industries, from information technology and automobiles to pharmaceuticals.

Analysts at the London School of Economics predicted a GDP loss of 0.03 percent in India, and a reduction of 0.68 percent in China. “India will be among the most difficult because the US is our biggest market. That is our biggest concern,” said Dhar, an international trade expert. “During the first term, Trump went into all this 'protection' mode, but when he comes back this time, he will come knowing that he has already received the authority for these policies.”

The fundamental trade tensions between the US and India, due to trade imbalances – with India the leading trader – have remained lower than the four years under the Biden administration, said Michael Kugelman, director of the Washington, DC-based. Wilson Center for South Asia. “But tensions could rise to the surface now and explode in the new Trump administration.”

Walter Ladwig, senior lecturer in international relations at King's College, London, acknowledged that “trade has always been a difficult issue in bilateral relations” and remained “at the forefront” during the earlier Trump years.

In contrast to Biden's approach of “seeking friends” for key high-tech items like semiconductors, Ladwig said, “It's hard to see Trump supporting efforts to build such things anywhere outside the US.” Friend-shoring refers to the idea of ​​encouraging companies to move from competitive countries like China to friendly countries.

Trump's anti-immigration policy

As India tries to build strong relations with the new Trump administration, it will face an unexpected reality, said Anil Trigunayat, an Indian spokesman who served as India's trade representative in New York: “The United States is trying to increase independence. And at the same time, Delhi is trying to increase international cooperation. “

Trump's first shot at the US presidency was marked by concerns for H-1B visa holders, a program for skilled foreign professionals seeking work in the country. Indians represent the majority of these visa holders, accounting for 72.3 percent last year. Chinese workers are a distant second, at 11.7 percent.

The rejection rate for H-1B applications rose from 6 percent in 2015 to 24 percent in 2018, a year after Trump took office, and shot up to 30 percent in 2020 after the COVID pandemic hit -19. Trump's tough rhetoric on immigration could strain relations, Dhar said. “Whenever the issue of immigration becomes a hot topic in the political discourse, Indian workers will need to look at the immediate impact,” he said.

Still, Trump 2.0 won't be like his first term, Trigunayat said — in part because India now knows what to expect from him. “I don't think the Indian foreign policy establishment has been blindsided by the fact that Trump has his own priorities,” Trigunayat said. “We're going to continue to have some issues, especially around access to the trade market and H-1B visas and immigration issues.”

The bonhomie and China factor

Many experts, however, believe that the great relationship between the US and India will continue to grow, regardless of who is in charge in Washington or New Delhi. “Modi has developed a personal relationship with Trump over the last decade … that's his negotiating style,” said Harsh Pant, vice president of studies and foreign policy at the Observer Research Foundation (ORF), a New Delhi-based think tank. “This will pay dividends for Modi when it comes to someone like Trump who trusts his vision.”

King's College's Ladwig agreed that the “good equation between Trump and Modi” should help bilateral relations.

According to Ladwig and Kugelman, uncomfortable questions about India's declining democratic index and the protection of minority rights will be “slightly raised” by Washington under Trump.

Trump's return to office could also ease pressure on India to move away from its longstanding friendship with Russia amid Moscow's war with Ukraine.

India's trade with Russia hit a record high this year, reaching $65.6bn – but the US recently sanctioned a series of Indian companies for apparently aiding Russia's war effort.

Trump, however, is committed to an end to the war in Ukraine, and is known to favor negotiations rather than a military confrontation with Russia. “Some of the chaos that has engulfed us [US-India] relations in recent years will decline and that includes the Russia factor,” Kugelman said.

Meanwhile, shared concerns about China's growing role in the Asia Pacific region will continue to act as a glue between India and the US under Trump, experts say.

Trump and the 'corrupt state'

In the past year, bilateral relations have been strained by US prosecutors' allegations that Indians tried to assassinate a US-based Sikh separatist. Although experts believe that Trump will not “cost India too much”, the chances of his administration letting go of the alleged targeting of an American citizen are bleak.

“Trump presents himself as a nationalist and if you look at his politics, he will be gaining political momentum by speaking out about his concerns,” Kugelman said. “It's not Russia, China, or trade, but the alleged 'killing for hire' that has been the biggest strain in the relationship.”

“This could be a rude awakening for India,” Kugelman added.

However, ORF's Pant said he believes that “if India was able to handle this crisis under Biden, it is likely to handle it much better under Trump.”

Today, “diplomacy to a large extent is conducted through human interaction at the highest level,” said Trigunayat, a senior Indian official. “And Modi's good relationship with Trump will be a great and rare opportunity to reach the White House.”