Donald Trump’s potential return to the White House presents both challenges and opportunities for India. While US-India relations have enjoyed bipartisan support in recent years, particularly as a counterbalance to China’s rising influence, Trump’s transactional and often unpredictable approach could introduce new dynamics. If navigated strategically, however, India stands to gain significantly from the evolving partnership.
Strengthening strategic alignment
The US-India strategic partnership is grounded in mutual benefits. Unlike other US allies, India does not depend on American financial or military aid, allowing the relationship to flourish on shared goals rather than dependencies. Moreover, there is an ideological alignment between Trump’s “Make America Great Again” (MAGA) agenda and Indian Prime Minister Narendra Modi’s vision of “Atmanirbhar Bharat” (self-reliant India).
Both leaders share a strong emphasis on nationalism, which has fostered personal rapport in the past. However, deeper cooperation will require careful management of two vulnerabilities in India’s position: its trade surplus with the US and the implications of China’s geopolitical ambitions.
Navigating trade challenges
Trump’s focus on reducing trade deficits and his inclination to use tariffs as leverage remain significant concerns for India. In 2022, India’s trade surplus with the US reached nearly $46 billion, partly due to its high tariff regime. Trump’s former trade representative, Robert Lighthizer, has labelled India the world’s “most protectionist” country, foreshadowing potential tensions.
India can mitigate these challenges by adopting a nuanced strategy:
- Selective Trade Concessions: Gradually reducing tariffs in key sectors and removing trade barriers could placate Trump’s demands without compromising India’s economic interests.
- Bilateral Free-Trade Agreement (FTA): Negotiating a comprehensive trade agreement could not only ease tensions but also enable India to capitalise on the “China Plus One” strategy, where global firms seek alternatives to Chinese manufacturing.
Such an agreement would provide mutual benefits. While India could attract foreign investments fleeing China due to Trump’s proposed tariffs on Chinese imports, the US could gain greater access to India’s vast consumer market.
Countering Chinese expansionism
A critical element of US-India relations is their shared interest in countering China’s assertive behaviour, particularly in the Indo-Pacific region. However, Trump’s prioritisation of economic deals over military engagements raises concerns about his commitment to regional security.
Trump’s transactional approach may lead him to overlook Chinese military aggression in exchange for trade concessions. For instance, his focus on Taiwan is reportedly driven more by its role in the semiconductor industry than its strategic importance as a US ally. This ambivalence could complicate India’s efforts to counter China’s influence in the Himalayas, South China Sea, and other contested regions.
India must be proactive in reinforcing its defence ties with the US, ensuring that security cooperation is not overshadowed by economic negotiations. This includes increasing military purchases and fostering collaboration on defence production and technological development.
Revitalising manufacturing
An FTA with the US offers India an opportunity to revitalise its struggling manufacturing sector. As companies diversify their supply chains away from China, India could position itself as a preferred destination for investment. This would not only boost domestic production but also strengthen India’s integration into global supply chains.
For the US, such an agreement would address Trump’s long-standing criticism of asymmetric tariffs. India’s imports from the US—dominated by energy products and gold—are unlikely to face significant political resistance, while key Indian export sectors such as pharmaceuticals, textiles, gems, and machinery stand to benefit from improved market access.
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Resolving trade tensions
Addressing trade disputes could unlock further avenues for collaboration, including:
- H-1B Visa Policies: Ensuring the continuation of current visa levels to support Indian professionals in the US.
- Technological Partnerships: Expanding joint efforts in areas like artificial intelligence, 5G, and clean energy.
Failure to resolve these tensions, however, risks limiting Trump’s willingness to deepen bilateral ties, especially if he perceives China as a lesser strategic threat.
Converting challenges into opportunities
While Trump’s approach to tariffs and trade might appear adversarial, it also provides India with an opportunity to attract capital fleeing China. Modi’s government must act decisively, leveraging Trump’s priorities to secure long-term gains for India.
By addressing trade concerns, fostering economic cooperation, and strengthening security ties, India can transform Trump’s return to the White House into a strategic advantage. As both nations navigate the complexities of their relationship, India has the chance to emerge as a stronger and more influential partner on the global stage.
