Following a significant setback in the US midterm elections, experts predict that President Donald Trump may be compelled to fast-track a trade agreement with India, seeking a crucial foreign policy victory amidst broader international challenges.
Photograph: Kevin Lamarque/Reuters
Key Points
- Experts believe a US midterm election loss could pressure President Trump to secure a quick trade deal with India to demonstrate American influence.
- Despite the shift in Congress, the underlying sentiment for economic nationalism and strong supply chains remains consistent across both US parties.
- The US President may utilise executive powers to push India for concessions, including market access for American agricultural and industrial goods.
- Indian exporters are keen for predictable trading conditions and an early conclusion of the Bilateral Trade Agreement (BTA) to boost confidence.
- India and the US have a framework for the first phase of the BTA, with ongoing negotiations focusing on tariff reductions for Indian goods.
A setback in the midterm elections may push US President Donald Trump to seek a quick trade agreement with India, according to experts.
They said that with foreign policy leverage failing against Russia, China and Iran, Trump needs a quick win at the trade deal front.
In a stinging rebuke to President Donald Trump, American voters on Tuesday gave the opposition Democratic Party control of the US Congress and flipped key gubernatorial posts in widely watched elections that will have consequences far beyond America.
Trump’s Republican Party faced stunning defeats in its strongholds such as Texas, Georgia and Iowa, where it lost the governors’ posts to the Democrats.
Impact of Midterm Results on Trade Policy
Economic think tank GTRI said that the adverse midterm results may not change President Trump’s trade direction because both Democrats and Republicans favour economic nationalism, domestic manufacturing and strong supply chains.
“With foreign policy leverage failing against Russia, China, and Iran, Trump needs a quick win. Expect heightened pressure on India for a trade deal to prove American clout and the midterm losses may push Trump to seek a quick India trade deal,” Global Trade Research Initiative (GTRI) founder Ajay Srivastava said.
He said the US President may now use his executive powers to pressure India for a quick deal that secures market access for US agricultural and industrial goods, alongside other major concessions for American companies.
Indian Exporters’ Perspective
Federation of Indian Export Organisations (FIEO) President SC Ralhan said the United States remains a key market for Indian goods and services.
“What will matter to Indian exporters in the months ahead is how US policy on tariffs and market access takes shape. MSMEs in particular need predictable trading conditions to price orders confidently and plan shipments months in advance,” he said.
Gems and Jewellery Export Promotion Council chairman Kirit Bhansali said that the outcome of the US midterm elections is an important development in the country’s political landscape.
The US remains one of India’s leading markets for gems and jewellery, and we look forward to continued engagement between the two countries to strengthen this important trade relationship, he said.
Outlook for Bilateral Trade Agreement
“While the change in the composition of Congress may influence the legislative environment and discussions on trade policy, we remain hopeful that the momentum towards the proposed India–US Bilateral Trade Agreement (BTA) will continue.
“The tariffs introduced earlier were executive measures and were not enacted through congressional legislation,” Bhansali said.
He said that exporters are looking forward to an early conclusion of the BTA, which would provide greater certainty to businesses, strengthen bilateral trade and support the long-term interests of gem and jewellery exporters in both countries.
India and the US have finalised a framework for the first phase of the BTA.
However, changes in the tariff landscape in the US have led to further negotiations on the pact.
India is seeking lower tariffs for its goods than its competitor nations.
