Midterm Challenges: How a ‘Lame Duck’ Donald Trump Could Accelerate India-US Trade Deal Efforts
The recent midterm elections in the United States are unlikely to alter President Donald Trump’s trade policies, according to an analysis by the Global Trade Research Initiative (GTRI). Both major political parties have increasingly embraced economic nationalism, which emphasizes domestic manufacturing and robust supply chains. This trend suggests that protective tariffs favored by Democratic lawmakers will continue to shape the trade landscape.
Trump is expected to leverage existing executive powers to maintain his trade agenda. He will likely utilize Sections 232 and 301, along with executive orders and Treasury sanctions, to exert unilateral pressure on trading partners. Ajay Srivastava, founder of GTRI, stated that the adverse election results will not change Trump’s trade direction, as both parties now support a similar economic approach.
Implications for the India-US Trade Deal
In light of recent foreign policy challenges, Trump is seeking a quick win, which may lead to increased pressure on India for a trade deal. GTRI indicates that both nations have signaled that a trade agreement is nearing completion, although uncertainties regarding the US offer have delayed finalization. Trump is likely to use his executive authority to push for an agreement that opens the Indian market to American agricultural and industrial products while securing concessions for US businesses.
The proposed trade framework between India and the US diverges from traditional free trade agreements. Unlike standard agreements that typically involve mutual reductions of import duties, the US would maintain its Most Favoured Nation (MFN) duties while India would be expected to lower or eliminate tariffs on a range of industrial and agricultural goods. The February 6 US-India Joint Statement outlines commitments for India, including aligning security and economic policies with the US and purchasing $500 billion worth of American goods over five years.
The US may leverage the threat of additional tariffs to ensure compliance from India, particularly concerning its purchases of Russian oil. Furthermore, signing the agreement would not shield India from potential future tariff actions, as the US could impose additional duties beyond its standard MFN rates. Srivastava cautioned that India should not confuse relief from threatened tariffs with a balanced trade agreement, emphasizing the need for enforceable reciprocal concessions and the freedom to protect its energy security and development priorities.
