Winning Bizness Desk

Mumbai. With Donald Trump’s projected victory, U.S.-India trade relations could get a significant boost, potentially making it easier for businesses in both countries. The close relationship between Trump and Indian Prime Minister Narendra Modi could lay the groundwork for redefined trade policies, benefiting businesses on both sides. If the U.S. takes steps to improve market access for Indian goods, India may also consider easing tariffs on American companies.

High Tariffs Have Long Been a Sticking Point

One of the major issues in U.S.-India trade relations has been high tariffs. Trump has previously been outspoken about his concerns regarding India's trade practices. During his election campaign, he labeled India as a “major abuser” of trade relations and promised to raise tariffs on all imports to protect American industries. During his first term from 2017 to 2021, he pushed for higher tariffs on Indian goods, creating tension between the two nations. However, despite trade disagreements, Trump maintained a positive relationship with Modi, which helped to keep diplomatic channels open.

A New Era of Negotiations

Toward the end of Trump’s first term, the U.S. and India had started working on a limited trade agreement to address some of their trade conflicts. Though the agreement did not progress due to the onset of the COVID-19 pandemic, sources suggest that both nations are open to resuming these discussions. An insider indicated that if the U.S. offers better trade conditions for Indian exports, India could reciprocate by reducing tariffs on American companies. This could particularly benefit U.S. businesses in sectors like automobile manufacturing, where high import duties have been a barrier.

India Open to Lower Tariffs for U.S. Companies

Sources indicate that India is considering tariff reductions for American products, especially in areas where U.S. companies have a strong interest, such as the automotive industry. Harsh Vardhan Shringla, India’s ambassador to the U.S. during Trump’s first term, mentioned that the two countries had a good working relationship. He believes a second Trump term could enhance this cooperation further, given the mutual understanding and respect that has developed between the leaders over time.

Potential for a Free Trade Agreement

Shringla also highlighted that during Trump’s first term, India was close to finalizing a “mini” trade deal, which was unfortunately stalled by the pandemic. With Trump’s potential second term, there is renewed hope for completing a more comprehensive free trade agreement. India, however, feels less pressured about its trade relations with the U.S. under Trump, as his primary trade focus has often been China. This reduces concerns about Trump’s tariff threats since they are likely to be more directed toward China than India.

The Growing U.S.-India Trade Relationship

Regardless of who holds office in the White House, trade relations between the U.S. and India have steadily improved over the past decade. Trump’s transactional approach to trade negotiations could work in India’s favor, allowing for a more balanced give-and-take in discussions. Modi, known for his good rapport with Trump, was one of the first world leaders to congratulate him on his victory, reinforcing the closeness of their ties.