Due to Donald Trump’s return to the White House, Indian exporters may face increased customs duties on key products, including automobiles, textiles, and pharmaceuticals, according to trade experts.
Trade experts warn that Trump’s ‘America First’ policy could lead to tougher negotiations and additional trade barriers. Analysts also anticipate stricter H-1B visa rules, raising costs for Indian IT firms. The American market is crucial, contributing over 80 per cent of India’s IT export earnings, making visa policy changes a serious concern.
Trump has previously labelled India a “large tariff abuser” and the “tariff king,” intensifying fears of protectionist measures. Ajay Srivastava, Founder of Global Trade Research Initiative (GTRI), indicated Trump might extend tariffs beyond China to countries like India.
“His America First agenda would likely push for protective measures, such as reciprocal tariffs on Indian goods, potentially adding barriers for key Indian exports like automobiles, wines, textiles, and pharmaceuticals,” Srivastava explained, adding that this could impact sector revenues.
Despite possible setbacks, stricter US policies towards China could create new opportunities for Indian exporters. Bilateral goods trade between the US and India was valued at $120 billion in 2023-24, slightly down from $129.4 billion in 2022-23. However, GTRI noted that US tariffs are already high on many items, with rates reaching 193 per cent for cereals and 188 per cent for dairy products.
Biswajit Dhar, another trade expert, suggested that Trump might hike sector-specific tariffs to fulfil his MAGA agenda. “With Trump coming to power, we are going to enter a different era of protectionism,” Dhar said, warning that electronics could be particularly affected. He also pointed out the uncertainty surrounding the Indo-Pacific Economic Framework for Prosperity (IPEF) and questioned Trump’s stance on global trade agreements like those under the WTO.
Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), expects Trump to advocate for balanced trade, possibly leading to disputes. He mentioned that ongoing protectionist trends and tighter immigration rules could persist. Agneshwar Sen of EY India noted that high tariffs might be strategically used to boost US manufacturing, potentially affecting Indian exports.
India could either look for new markets or negotiate a favourable trade deal. Srivastava also highlighted concerns about outsourcing restrictions impacting IT exports, while acknowledging that some statements might be political rhetoric. H-1B visa policies remain crucial, with Trump’s stricter immigration stance posing challenges for Indian professionals. Despite these hurdles, easing environmental standards under Trump could aid Indian exports.
Additionally, India’s demand for US technology and energy, along with American investment in sectors like IT and manufacturing, presents avenues for growth. Services trade between the nations grew by over 30 per cent since 2018, with substantial American investments flowing into India, totalling $66.7 billion since April 2000.