A win that will affect the global economy

• Bilateral Relations With Major Powers Like – USA

1. Trade Wars and Economic Protectionism

• Escalating Trade Tensions: Trump’s return would likely mean a resurgence in trade wars, especially with countries like China and India. He has previously targeted both China and India, implementing tariffs and trade restrictions to prioritize U.S. economic interests under his "America First" agenda.
• India's Trade Surplus with the U.S.: India runs a trade surplus of $36.74 billion with the U.S. Despite this, Trump has referred to India as a “major abuser” of trade ties, and has historically taken measures to increase tariffs on goods, which could lead to tensions.
• Import Duties on Steel & Aluminum: Trump's first term saw the unilateral imposition of import duties on aluminum and steel in 2018, a policy that affected India and other countries. India retaliated with tariffs on U.S. farm produce but did not escalate the situation further.

2. Impact on India's Key Sectors:

• IT Services and Immigration Restrictions: One of the most significant concerns for India is the potential for stricter restrictions on H1B and L1 visas, which are crucial for India’s IT professionals working in the U.S. Trump’s first term saw a sharp rise in the denial rates for these visa categories, which led Indian companies like Infosys to hire more American workers.
• IT and Service Exports at Risk: The IT services sector, one of India’s top exports, could face more challenges under Trump's immigration policies and protectionist stance. If the H1B visa program is further restricted, it could limit the ability of Indian IT firms to send professionals to the U.S., affecting their business model and growth prospects.

3. Trade Policy and Global Supply Chains:

• Proposed Tariffs on Imports: Trump has proposed a 10% tax on all imports, with a 60% tariff on Chinese-made goods, which would have far-reaching inflationary effects globally. The U.S., as a key player in global supply chains, would likely see rising prices for goods, which could affect both consumers and businesses worldwide.
• Impact on India’s Exports: The tariffs could affect various sectors of India’s economy, including technology products and agricultural exports like steel and iron, which India exports to the U.S. India may face stiffer opposition in these markets if Trump enacts higher tariffs.
• Potential Effects on FDI from U.S. to India: The U.S. remains India’s largest source of Foreign Direct Investment (FDI), amounting to $103 billion in the last fiscal. However, a protectionist policy under Trump could reduce this flow if businesses face higher costs or greater restrictions on trade.

4. Global Economic Shifts:

• U.S.-China Trade Relations: Trump’s administration would likely escalate efforts to reduce the U.S. trade deficit with China, with potential impacts on global trade dynamics. The trade war could affect countries like India, which may face competition from Chinese exports in key markets.
• Impact on China's Declining Growth: With China’s economic growth slowing down due to a struggling property market and declining demand, the trade war under Trump could exacerbate challenges for China in global markets, leading them to seek alternative trading partners, including India.
• Energy and Supply Chain Alterations: Trump’s pro-oil and natural gas stance may alter global supply chains, especially energy markets. The U.S. could push for greater oil and gas production, undermining global climate goals and shifting dynamics with countries like the EU, which is moving away from Russian LNG dependency.

5. U.S.-EU Relations and Climate Policies

• Retreat from Climate Goals: Trump’s administration is expected to de-prioritize climate change initiatives, including limiting the U.S.'s commitments to reducing carbon emissions. This would impact global efforts to tackle climate change, particularly in relation to energy production.
• Negotiations with EU on Carbon Border Mechanism: Trump's push for increased fossil fuel production could conflict with the EU's Carbon Border Adjustment Mechanism, which aims to reduce the carbon footprint of imported goods. This could lead to trade tensions between the U.S. and the EU, affecting industries such as steel and aluminum, where both regions are key players.

6. Broader Global Economic Consequences

• Inflationary Pressures: The rise in tariffs and the increased cost of imports would likely be passed onto consumers, leading to inflation in the U.S. and potentially affecting the global economy. Countries that are major trading partners with the U.S. could face inflationary pressures as supply chains are disrupted.
• Global Supply Chain Disruptions: The U.S.'s key role in the global supply chain for products like technology, pharmaceuticals, and agriculture means that a rise in tariffs and trade restrictions could disrupt international trade. Countries like India, which depend on U.S. markets for exports, could face challenges in maintaining the flow of goods.

Conclusion:

• Donald Trump’s return to the presidency could bring significant economic disruptions, particularly for India. The likely escalation of trade wars, continued economic protectionism, and restrictions on immigration could affect India’s trade balance, IT sector, and foreign investments.
• While the U.S. remains a key partner for India, Trump's approach to global trade and immigration may strain the relationship, especially in the context of shifting global supply chains and growing trade tensions.