{"id":43297,"date":"2024-11-06T12:24:22","date_gmt":"2024-11-06T06:54:22","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=43297"},"modified":"2025-05-06T01:23:21","modified_gmt":"2025-05-05T19:53:21","slug":"what-trump-2-0-could-mean-for-india-us-trade","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-trump-2-0-could-mean-for-india-us-trade\/","title":{"rendered":"What Trump 2.0 Could Mean for India \u2013 US Trade"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Introduction<\/li>\n<li>Trump\u2019s Trade Stance on India<\/li>\n<li>India\u2019s Economic Ties with the U.S.<\/li>\n<li>Potential Impact on Key Indian Sectors<\/li>\n<li>Trump\u2019s Approach to Trade Agreements<\/li>\n<li>U.S. Tariffs on Steel and Aluminium<\/li>\n<li>Inflationary Pressures and Its Effect on Indian Exports<\/li>\n<li>Conclusion<\/li>\n<\/ul>\n<h2><strong>Introduction<\/strong><\/h2>\n<ul>\n<li>The upcoming U.S. presidential race between Kamala Harris and Donald Trump has significant implications for global policies, including those affecting India.<\/li>\n<li>While a Harris win would likely maintain continuity with the Biden administration\u2019s approach, a Trump victory could lead to disruption and unpredictability, especially in trade and business policy, which directly impacts India.<\/li>\n<\/ul>\n<h2><strong>Trump\u2019s Trade Stance on India<\/strong><\/h2>\n<ul>\n<li>Trump has referred to India as a \u201c<i><strong>very big [trade] abuser<\/strong><\/i>\u201d and could renew trade tensions by imposing higher tariffs on over $75 billion worth of Indian exports.<\/li>\n<li>His previous term (2017-2021) witnessed a rise in protectionism, affecting India&#8217;s trade.<\/li>\n<li>In 2019, India lost its preferential trade status under the <strong>Generalized System of Preferences<\/strong> (GSP), impacting $5.7 billion of its duty-free exports to the U.S.<\/li>\n<\/ul>\n<h2><strong>India\u2019s Economic Ties with the U.S.<\/strong><\/h2>\n<ul>\n<li>The <strong>U.S. is India\u2019s largest trading partner<\/strong>, with bilateral trade reaching nearly $120 billion in FY24, slightly surpassing India&#8217;s trade volume with China.<\/li>\n<li>This relationship is crucial as it provides India with foreign exchange, with 1<strong>8% of India\u2019s exports directed to the U.S.<\/strong><\/li>\n<li>India\u2019s export portfolio to the U.S. is diverse, spanning textiles, electronics, and engineering products, making the U.S. a vital market.<\/li>\n<\/ul>\n<h2><strong>Potential Impact on Key Indian Sectors<\/strong><\/h2>\n<figure class=\"image image_resized\"><img decoding=\"async\" src=\"https:\/\/vajiram-prod.s3.ap-south-1.amazonaws.com\/Potential_Impact_on_Key_Indian_Sectors_423de6cef7.webp\" alt=\"Potential Impact on Key Indian Sectors.webp\" \/><\/figure>\n<ul>\n<li>If Trump returns to office, Indian sectors like pharmaceuticals and IT services could suffer.<\/li>\n<li>Pharmaceutical exports might face higher scrutiny, and H-1B visa restrictions could reduce opportunities for Indian IT professionals.<\/li>\n<li>Tax policy changes might impact corporate cash flows, potentially offsetting some negative impacts.<\/li>\n<li>The rupee could also depreciate due to inflation and elevated interest rates in the U.S.<\/li>\n<\/ul>\n<h2><strong>Trump\u2019s Approach to Trade Agreements<\/strong><\/h2>\n<ul>\n<li>Under Trump, the <strong>U.S. moved away from multilateral trade agreements and undermined the WTO\u2019s dispute resolution function<\/strong> by blocking judge appointments.<\/li>\n<li>Although Biden has promised reforms, the dispute resolution system remains inactive. Trump\u2019s return could further erode the WTO\u2019s influence and affect global trade dynamics.<\/li>\n<\/ul>\n<h2><strong>U.S. Tariffs on Steel and Aluminium<\/strong><\/h2>\n<ul>\n<li>During his first term, Trump imposed tariffs on steel (25%) and aluminium (10%) under national security provisions.<\/li>\n<li>Biden retained these tariffs but negotiated with India and the EU for exemptions.<\/li>\n<li>Trump has criticized India\u2019s tariff structure, branding it as \u201chigh\u201d and calling India a \u201ctariff king.\u201d<\/li>\n<li>Although India\u2019s tariffs rose to 18.1% in 2022, its government justifies these as measures to support local manufacturing, including sectors under the Production-Linked Incentive (PLI) scheme.<\/li>\n<\/ul>\n<h2><strong>Inflationary Pressures and Its Effect on Indian Exports<\/strong><\/h2>\n<ul>\n<li>Higher tariffs and protectionist policies in the U.S. could stoke inflation.<\/li>\n<li>A report from the Peterson Institute for International Economics warns that <strong>Trump\u2019s policies might push U.S. inflation up to 9.3% by 2026<\/strong>, from an otherwise projected 1.9%.<\/li>\n<li>Higher inflation could reduce U.S. demand for Indian labour-intensive exports like textiles, gems, and leather products, impacting Indian jobs tied to these industries.<\/li>\n<\/ul>\n<h2><strong>Conclusion<\/strong><\/h2>\n<ul>\n<li>The <strong>outcome of the U.S. presidential race will play a critical role in shaping India-U.S. trade relations<\/strong>.<\/li>\n<li>A Trump presidency may renew trade frictions and tariff hikes, challenging India\u2019s export-driven industries, while a Harris victory could provide continuity, though not without challenges given the global shift towards trade protectionism.<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q1. What is Tariff-Rate Quota?<\/strong><\/h3>\n<p>\u00a0In economics, a tariff-rate quota is a two-tiered tariff system that combines import quotas and tariffs to regulate import products. A TRQ allows a lower tariff rate on imports of a given product within a specified quantity and requires a higher tariff rate on imports exceeding that quantity.<\/p>\n<h3><strong>Q2. What is the Most Favoured Nation status?<\/strong><\/h3>\n<p>Most favoured nation status is given to an international trade partner to ensure non-discriminatory trade between all partner countries of the WTO. A country which provides MFN status to another country has to provide concessions, privileges, and immunity in trade agreements.<\/p>\n<p><strong>News: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/us-elections-results-trump-harris-india-9655122\/\" target=\"_blank\" rel=\"nofollow noopener\">US elections results: What Trump 2.0 could mean for US-India trade<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Upcoming U.S. presidential race between Kamala Harris and Donald Trump has significant implications.<\/p>\n","protected":false},"author":5,"featured_media":43298,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-43297","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/43297","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=43297"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/43297\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/43298"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=43297"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=43297"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=43297"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}