Harris or Trump, it’s rocky trade ties either way for India

A change at the helm of the United States government is imminent, and this could lead to a shift in ties between India and the world’s biggest superpower. Much will depend on the person taking over as president.

Donald Trump and Kamala Harris have both evinced their closeness to India in differing ways. Trump has spoken of his friendship with Prime Minister Narendra Modi, while Harris has mentioned her upbringing by an immigrant Indian mother.

Yet these comments are aimed at winning over the large Indian diaspora that wields more heft than its actual numbers. This is largely due to the affluence of this ethnic group which has a median income higher than other immigrant communities along with better education levels. Besides, the fact that persons of Indian origin such as Satya Nadella, Sunder Pichai, and Shantanu Narayan head tech giants like Microsoft, Alphabet, and Adobe is not lost on either of the candidates.

On strategic issues, it is likely that the relationship will remain on an even keel given the extent to which the two countries have moved closer together in a variety of ways. By joining the Quad, India has aligned itself in some sense to a Western group that includes the US and Australia, while dealing with the Indo-Pacific region. The warmth that was exhibited during the Trump era with Modi has also been continued during the Joe Biden administration with the Indian leader’s visit last year being given considerable importance. Despite the controversy over the possibility of the involvement of an Indian agent in a conspiracy to attack Khalistani leader Gurpatwant Singh Pannun, the official US spokesperson expressed satisfaction with India’s co-operation on this issue. 

It is on economic and trade ties, however, that the relationship may face challenging times as a new president takes over. Significantly, India has been keen to enter a free trade pact but there has been little interest from the US side. The issue was mentioned during the Trump administration, but no action was taken then. Subsequently, even the Biden administration has not been responsive to the idea. It had also been expected that the enhanced tariffs levied by Trump on steel and aluminium exports from India would be reduced by Biden, but these have remained unaltered.

It must also be recalled that Trump had ended India’s access to the Generalised System of Preferences (GSP) that gave preferential market access. This was on the grounds that reciprocal facilities had not been provided to US goods. There has been no rollback on this facility as well by the Biden administration. Given the fact that Harris has indicated there will not be much change from existing policies in case she wins the elections, it seems like the status quo will continue. 

As for future bilateral trade policies, Trump has taken a much harsher position on tariffs related to India as well as the rest of the world. He has declared that a flat 10 per cent levy would be imposed on all imports with Chinese goods specifically being slapped with a 60 per cent duty. As for India, despite the avowed bonhomie with Modi, he has called India “a very big tariff abuser”. This is in line with pronouncements during his earlier administration when he referenced the high import tariffs on Harley-Davidson motorcycles to highlight the skewed trade relationship.

In other areas, however, such as the collaboration for setting up a national security semiconductor project, programmes are likely to continue irrespective of the change at the top. In addition, the US has now begun to supply high technology defence equipment to India such as the latest sale of military drones that is expected to give an edge to the armed forces. A roadmap has already been laid down for defence industrial co-operation envisaging manufacture of jet engines and munitions. Neither Trump nor Harris is expected to disturb these arrangements, in light of the concerns over the potential expansionism of China in the Indo-Pacific region.

It seems that the trade relationship is going to continue being rocky irrespective of whether Trump or Harris succeed at the polls. With the former, however, there are surely fears that tariff barriers to a huge export market will rise even further. The fact that India has a trade surplus has prompted Washington’s concerns over lack of market access.

On the positive side, collaboration in high technology areas like chips and defence equipment is likely to continue expanding under either a Republican or Democratic incumbent. As far as bilateral economic ties are concerned, therefore, there may be little to choose for India on having either Trump or Harris as the new resident of the White House.

(Sushma Ramachandran is a senior journalist.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.