With Donald Trump poised to return as the President of the United States, Indian exporters may face new challenges in the form of higher tariffs and more stringent trade policies. Trump’s “America First” agenda, rooted in protectionism, could bring increased customs duties on key Indian exports such as textiles, pharmaceuticals, and automobiles. This shift might affect India’s revenue and market share in the U.S., while the tech industry, especially reliant on the H-1B visa, is particularly vulnerable to immigration policy changes.
Potential Sectoral Impacts
Trump’s trade policies are expected to directly impact some of India’s most significant sectors:
- Textiles and Apparel
- The U.S. may impose higher tariffs on textile exports from India, which could lead to reduced demand and stiffer competition with domestic and international producers in the U.S. market.
- Pharmaceuticals
- Indian pharmaceutical products, which are essential exports to the U.S., could face increased tariffs, making them less competitive and affecting India’s stronghold in the American generic drugs market.
- Automobiles
- The automobile sector may be hit hard if the U.S. increases customs duties on vehicle imports. This could reduce the appeal of Indian-made automobiles in the American market, directly impacting manufacturers and exporters.
- Information Technology (IT)
- The IT sector is particularly vulnerable, as over 80% of India’s IT export earnings come from the U.S. Potential tightening of H-1B visa rules could increase operational costs, slow growth, and complicate hiring for skilled workers, directly impacting Indian IT giants that rely heavily on this visa.
- Chemicals and Engineering Products
- With potential tariffs on chemicals and engineering products, India could see a decline in its competitive advantage in these areas, which would impact revenue.
- Electronics
- Trump’s protectionist stance might affect electronics exports from India, especially if there are changes to the Indo-Pacific Economic Framework (IPEF), a trade agreement involving multiple countries.
- Food and Agriculture
- High existing U.S. tariffs on agricultural products like dairy (188%), fruits and vegetables (132%), and cereals (193%) could hinder Indian farmers’ and producers’ ability to export to the U.S. effectively.
The Bigger Picture: Trade and Investment
Trump has previously called India a “large tariff abuser,” labeling the country as the “tariff king.” Under his administration, Indian exporters might face reciprocal tariffs, especially on products like textiles, automobiles, and pharmaceuticals. The bilateral trade in goods between the U.S. and India was USD 120 billion in 2023-24, a dip from USD 129.4 billion the previous year. India’s merchandise exports to the U.S. rose by 46% from USD 53.1 billion in 2020 to USD 77.5 billion in 2024, highlighting the significance of this trade relationship.
Opportunities Amidst Challenges
While Trump’s stance could pose challenges, his tough approach toward China might present opportunities for Indian businesses. Sectors like electronics and pharmaceuticals could benefit as the U.S. looks for alternative suppliers outside of China. Additionally, India’s growing demand for advanced technology and capital goods opens avenues for increased bilateral trade with the U.S.
As Trump’s “America First” agenda could usher in a new era of protectionism, India must be prepared for trade negotiations that balance these new realities. By diversifying markets, adapting to shifts in policy, and aligning with U.S. geopolitical aims where possible, Indian exporters can mitigate potential risks while seizing emerging opportunities.
