Mexico and Canada together account for 30 percent of all US imports. The US imported $475 billion worth of goods from Mexico and $418 billion from Canada last year, from cars to groceries. The US exported $354 billion worth of goods to Canada and $322 billion to Mexico last year. So, a tariff war will have serious implications for both sides and this would mean higher prices for consumers in both countries.
The new president has indicated that his America first policy would not tolerate any deemed challenge to the dollar. This may not be unduly worrisome for India, as we are not part of any initiative to see the back of greenback as the default global currency. But there are other ways in which India and Indians would get hurt. President Trump sees all non-regularised immigrants as alien enemies and they include Indians in a very significant manner.
India, while not directly targeted by the initial round of tariffs, is not immune to the repercussions of this protectionist wave. The interconnected nature of the global economy means that disruptions in one region can have cascading effects elsewhere. For India, the potential fallout is multifaceted. Trump’s broader economic policies could affect India in multiple ways. For instance, the protectionist stance may dampen global trade volumes, impacting India’s export-driven sectors.
One of the most immediate concerns for India lies in the realm of immigration policy. Trump’s administration has consistently taken a hardline stance on immigration, labelling non-regularized immigrants as adversaries. This rhetoric and the accompanying policy shifts are expected to impact an estimated 725,000 Indians living and working in the United States. Many of these individuals contribute significantly to sectors like technology and healthcare, which rely heavily on skilled immigrant labour. Any restrictive changes to immigration policies, such as tighter H-1B visa regulations, could disrupt the flow of talent and innovation, hurting both India and the U.S. economy.
Beyond immigration, trade between India and the United States faces additional flashpoints, particularly in the realm of technology. The U.S. has long been a major destination for Indian IT services and technology exports. However, growing concerns about data security, intellectual property rights, and fair trade practices have strained this relationship. American policymakers have often accused Indian firms of unfairly benefiting from access to the U.S. market while imposing barriers to American companies in India. These grievances have led to calls for greater reciprocity in trade relations, potentially complicating the bilateral economic partnership.
Another area of concern is the potential for increased scrutiny of Indian pharmaceutical exports to the U.S. India is one of the largest suppliers of generic drugs to the American market, providing affordable healthcare solutions to millions. However, the Trump administration’s focus on ‘fair trade’ could lead to stricter regulatory requirements and higher tariffs on Indian pharmaceuticals, driving up costs for American consumers and threatening the competitiveness of Indian firms.
Agriculture, too, is a contentious issue. The U.S. has often criticised India’s agricultural subsidies and trade policies, arguing that they distort global markets. Conversely, India has resisted American demands for greater access to its agricultural markets, citing the need to protect its domestic farmers. This standoff reflects the broader challenges of reconciling the economic interests of two vastly different economies.
Trump’s America First policy also poses challenges for India’s renewable energy sector. The U.S. has been a key partner in India’s efforts to transition to cleaner energy sources, providing technology and investment in solar and wind energy projects. However, protectionist measures, such as tariffs on imported solar panels, could increase costs for Indian renewable energy initiatives, slowing the country’s progress toward its climate goals.
The destabilising potential of Trump’s tariff-centric policies underscores the need for greater multilateral cooperation to safeguard global economic stability. While protectionism may offer short-term gains for certain domestic industries, it risks undermining the broader principles of free trade that have driven global economic growth for decades. For countries like India, the challenge lies in mitigating the negative impacts of these policies while seizing opportunities to strengthen their own economic foundations. (IPA Service)