With Donald Trump elected as the 47th US President, the spotlight will once again fall on his signature "America First" policy which has been the cornerstone of his agenda of the recently concluded presidential elections. The key question here is whether his approach will evolve which seems unlikely given his previous track record. I think it would be a good moment to ponder on the new challenges or opportunities that Indian businesses can now expect.
In his earlier stint as the President, the U.S. had focused on reducing dependency on foreign imports while boosting domestic manufacturing. This strategy, which prioritises the protection of American industries, poses significant challenges for our local businesses. Increased tariffs and trade barriers are likely to affect Indian exporters, particularly in sectors like textiles, automotive components, and pharmaceuticals, which rely heavily on the U.S. market. Our companies may face higher costs, which subsequently will compel them to rethink their strategies to remain competitive in the face of probable protectionist policies.
Having said that, there is a potential opportunity for India in the wake of Trump's aggressive stance on China. The administration has proposed tariffs as high as 60% on Chinese goods and is considering reducing China’s Most Favoured Nation status. In this environment, Indian companies can seize the opportunity to present their products to the various US markets as an alternative to Chinese imports. I think this positive shift could be a boon for Indian businesses, particularly in sectors like manufacturing and technology.
On the flip side, India is likely to also face increased pressure to boost its imports from the US. As we are all aware that we currently export more to the US than what we import, so Trump’s administration may push for greater access for American goods in the Indian market. This in turn may threaten higher tariffs on Indian exports if this is not achieved.
With the leaders of both the nations termed as good friends, I feel there are great opportunities that our businesses can capitalise on. However, Indian companies must also understand that even as the US will look to reduce its reliance on China, our ability to navigate these shifting dynamics will depend on our capacity to adapt to changing trade policies, on how we manage competitive pressures, and most importantly on how we exploit the emerging openings in the US market.
I invite your opinions.