Trump's 2024 Win and Its Effect on India-US Economic Ties

Trump's 2024 Win and Its Effect on India-US Economic Ties

Effects of US election on India-USA Trade

As per the new economic trends, a lot of discussion is going to be done on the re-election of Donald Trump in the White House and what it brings ahead for the $191 billion India-US trade relationship. The US will definitely bring transformational changes in its bilateral economic relationship with India, the world's largest economy and the fifth largest one, with the elections of the US presidential candidate in 2024. A deep dive into the market tracking Sensex, Hang Seng, and DAX on MoneyControl throws up some of the critical factors which are likely to determine trade relations in the times to come. Another term for Donald Trump could change the game with respect to the tariff structure or even technology collaborations for both the countries.

Historical Context of India-US Economic Relations

In the last two decades, there has been a complete metamorphosis in the economic relationship between India and the US. The bilateral trade increased from 20 billion dollars in the year 2000 to 142 billion in the year 2018, with a compound annual growth rate of 11.5%.

Previous US administrations and Trump's election economic policies

Major policy changes were introduced during Trump's first term that altered the economic interaction. A specific bilateral approach and policy labeled as "America First" generated several trade tensions. India lost generalized trade benefits given to it by the US and in retaliation India imposed some sanctions against US products. The situation further deteriorated as Mr. Trump referred to India as a "tariff king" and increased tariffs on steel and aluminum products.

Bilateral trade growth

Trade of goods and services between the two countries was inelastic and constantly grew:

i) Trade of goods of the two nations grew up to 87.5 billion US dollars in 2018.

ii) The trade level of the two services remained above 54.6 billion in 2018.

iii) Annual trade turnover of the two nations exceeds 190 billion US dollars, making India the largest trading partner for the US.

iv) Service sector grew rapidly by the CAGR of 13.4%.

Important economic indicators and agreements

The bilateral relationship has been a journey of several crucial turning points. A game-changer came in July 2005 when both countries agreed to pursue full civil nuclear energy cooperation. Consolidation came at the hands of the Nuclear Suppliers Group waiver in September 2008, ultimately leading to the landmark India-US civil nuclear cooperation agreement.

Investment flows between the countries tell an impressive story. The US ranked as the sixth-largest source of FDI into India with total inflows of $27.01 billion from April 2000 to June 2019.  Indian companies invested $18 billion across all US states.

The two countries did it’s best to calibrate differences on trade though tensions flared periodically. A partial trade agreement remained under negotiation until the end of Trump's first term; a glimmer of hope was lost in the pandemic that derailed its completion. The efforts indicated renewed commitment to finding a middle ground despite disagreements on policies, consensus in choosing a road.

Trade Policy Overhaul

Trump's proposed trade policies are going to redesign the world of global trading. His intentions include some unique tariff structures that may alter the economic map of relations between India and the US. Our study in moneycontrol represents Trump's proposal in placing a 60% tariff on China imports as well as extra tariffs ranging from 10-20% on products coming from other countries .

New Possible tariff structures

Trump's tariff vision doesn't apply only to China. Analysis shows that there is at least an overall import tariff of 10% on all goods imported to the United States. He has some detailed plans and includes:

a) A 200% tariff on imported cars, which he mainly sets for Mexico

b) A plan to phase out Chinese electronics, steel, and pharmaceuticals over four years

c) There is a possible 25% tax on Mexican imports as linked with border security measure

What it all means for the calculations of the trade deficit

The implications for India's trade position emerge starkly. The trade surplus with the US rises to USD 35.30 billion in FY24. Moneycontrol market analysis reveals India's average applied tariff was 17% in 2023, which stays well below the WTO-permitted limit of 50.8%.

Strategic trade negotiations

India's trade negotiations seem, on its part at least, a strong push on new ground. Studies show that New Delhi would grant US companies easier access to its market if Washington does the same. Key takeaways include:

a) The prospect of lower import duties for the car industry.

b) The pressure for balanced trade terms for Indian goods.

c) New avenues in areas that might become viable for India as the latter succeeded in maintaining high duties to support home industries.

The moneycontrol tracking of the Sensex may reveal the demand for textiles, pharmaceuticals, and the Morbi ceramic industry, might go up under Trump's administration . One of the reports from CareEdge suggests there will be some good news - India will benefit with this change in global trade patterns.

Its status today as the world's fastest-growing major economy makes this shift all the more meaningful by holding out sound returns on investments. Analysis by dax moneycontrol and hang seng moneycontrol reveals that although higher tariffs may be an extreme shake-up in global trade flows, India gets a unique chance to become a trusted alternative for overseas companies seeking to broaden their supply chains away from China.

Sector-Specific Economic Impact

Our sector-specific analysis on the moneycontrol website reflects massive changes in a few sectors with a potential Trump regime. The market study reflects a wide array of influences on technologies, manufacturing, and healthcare .

Technology and IT services outlook

The IT services landscape has witnessed a sea change. Rejection of H-1B visas increased from 4% in 2015 to 17% in 2019. Indian IT companies seem to have come out stronger and are said to be focusing on locally recruited talent:

a) Infosys reduced visa dependency from 65% to below 50% 

b) Wipro achieved 69% local workforce by FY20.

c) The US still accounts for over 80% of India's IT export earnings.

Manufacturing and automotive industry changes

Market analysis on sensex moneycontrol indicates that new growth is taking place in manufacturing. India would look at lowering import tariffs in the automobile sector if Washington offers mutual benefits. Trump's stand on China might open up fresh avenues for Indian exporters in electronics and engineering products.

Healthcare and pharmaceutical trade dynamics

The pharmaceutical sector represents a mixed bag of challenges and opportunities. Health policy initiatives by Trump could impact Indian Pharma in multiple ways :

a) Generic drugs will experience high demand even with probable tariffs rises.

b) Biosimilars and specialty generics will create a lot of opportunities for both parties.

c) Contract Development and Manufacturing Organizations (CDMOs) will benefit from policies like the Biosecure Act.

Advanced Manufacturing Technologies Data for dax moneycontrol and hang seng moneycontrol indices reflects that Indian pharmaceutical industry is getting ready for the change through investments in advanced manufacturing technologies.

The US-India Affordable Medicine Partnership also forms an important part, as India is an essential component of the US healthcare delivery system through quality assured medicines.

Trump's move to reduce Chinese dependence may well be in significant interest for Indian manufacturers. Indian CDMOs stand to benefit by filling the production gaps which were formerly being serviced in China. This will once again fall in line with the overall China+1 strategy and will help to benefit the Indian chemical, electronics manufacturing services, and auto ancillary sectors.

Shifts in Investment Landscape

Our market research on moneycontrol reveals significant changes in the investment landscape of India with the approaching Trump's possible return. The analysis unfolds a complex web of opportunities and challenges expected to change the map of cross-border investments.

Foreign Direct Investment prospects

FDI in India may well be on the verge of a sea change with Trump 2.0. During his first term, the Trump administration made wholesale changes to regulatory regulation in order to turn around the investments that had flowed out of the United States and thus revolutionized inward FDI flows by a significant measure. In contrast, India has succeeded in diversifying its FDI source into emerging sectors such as:

a) Renewable energy infrastructure

b) Sea transport and logistics

c) Manufacturing of medical devices

d) Surgical appliances

e) Initiatives under the digital economy

The country has identified many emerging sectors that hold high interest in FDI , which could offset any decline in areas of traditional investment.

Cross-border merger regulation

Cross Border merger regulation environment continues to evolve. The latest studies indicate that CFIUS has become more aggressive in pursuing its mandate for national security. Some notable trends include the following:

CFIUS has tracked a tighter scrutiny pattern with higher mitigation and withdrawal/refiles rates. It also affects non-Chinese investors more, as you are dealing with an approach that has become more inconsistent and protracted.

Stock market ramifications

Latest sensex moneycontrol figures indicate major changes in FPI investments in stocks. FPIs offloaded equities worth Rs 94,017 crore in October, after being net buyers for the fourth straight month:

a) June: Rs 26,565 crore 18

b) uly: Rs 32,365 crore 18

c) August: Rs 7,320 crore 18

d) September: Rs 57,724 crore 18

Trump policies in the arena of economy will boost the US dollar and possibly increase the rates of bonds due to reductions in the taxation and fiscal deficit. It can draw the global capital towards the US, which may weaken the currencies of the emerging market countries, and Indian rupee is not an exception either.

Potential benefits to Indian export sectors. Increased duties on Chinese goods may give a competitive edge to Indian manufacturers in auto parts, solar equipment, and chemical production in the US markets. Data of dax moneycontrol and hang seng moneycontrol indices indicates that energy costs are likely to go down because of the fossil fuel policies of Trump. And this would help Indian oil companies like HPCL, BPCL and IOC.

Strategic Economic Initiatives

On the moneycontrol platform, it is depicted that the moneycontrol partnership, which is unprecedented cooperation between India and the US, is conducted in respect of critical technology sectors. That joint program framework may comprehensively reshape bilateral economic relations.

Joint Economic Cooperation Programs

Several groundbreaking initiatives are led by the US-India Initiative on Critical and Emerging Technologies (iCET). The agreement agreed upon in May 2022 promotes cooperation in defense innovation, future telecommunications, advancement of the space sector, semiconductor supply chain resilience, and the development of critical technology.

The US CHIPS and Science Act passed in August 2022 is a life blood of bilateral technology cooperation. It aligns well with the Indian Semiconductor Ambition as evidenced by the development of OSAT facility by Micron in Gujarat.

Collaborations for Innovation and R&D

R&D has witnessed humongous financial commitments. Sensex money control market tracking unmasks some of these prime funding initiatives :

a) USD 90+ million mobilized to the US-India Global Challenges Institute over five years.

b) USD 5+ million in aggregate grants to co-researched projects in telecommunications and connected vehicles.

c) USD 10 million allocated to research in semiconductor and green technologies.

d) USD 7 million committed to workforce training at the Asia Open RAN Academy.

The Indo-US defense ecosystem has undergone a sea change with three flying wins from the summits of the India US Defense Accelerator Ecosystem (INDUS-X). This development provides encouraging indications of matching dax moneycontrol and hang seng moneycontrol market signals resulting in upward investments in defense.

Cooperation for digital economy

Efforts to cooperate in the digital world have shown commendable progress in the following areas

1. Critical Technology Areas:

> Artificial Intelligence Development

> Quantum computing advancement

> Biotechnology innovation

> Clean Energy solutions.

2. Material Security: 

India has strategized its entry into the Minerals Security Finance Network (MSFN), the U.S.-led initiative, which further strengthens critical mineral supply chains. The partnership, sealed in June 2023, makes India a player on the global map of critical minerals.

The new US-India Advanced Materials R&D Forum promotes joint collaboration among American and Indian universities, national laboratories, and private sector researchers. India has the potential to become an emerging talent hub in the near future, encouraged by its significant market dynamics; such partnerships are therefore very critical for this country. The two countries have committed to new mechanisms for enhanced cybersecurity cooperation through bilateral dialogue.

Conclusion

One can see a long list, but this study would provide in-depth analysis of how Trump's probable White House return might shape India-US economic ties. Under Trump, the bilateral trade between the two countries has reached $191 billion and continues to be robust despite policy changes. Trump may very well bring in universal tariffs and new sector policies, which will change the pattern of trade. India would most definitely gain since companies scramble to diversify their supply lines away from China.

The IT services sector has already proved its adaptability in building a local presence. However, the manufacturing and pharmaceutical sectors seem very promising and could expand more as you have companies looking for alternative production sites in lieu of Chinese ones. With economic cooperation running so deep between two nations, it is deeper than any political change like initiatives from iCET and semiconductor collaborations.

The landscape of investments will shift under the new regulatory framework. India's growing sectors and its role in global supply chains will be a factor in maintaining high economic ties, regardless of the change in policy. This is the reason why the relationship between India and the US will only grow stronger with a long-standing partnership and their shared strategic interests.