India bets on Modi-Trump warmth to navigate choppy future with US
Tariffs and Trump’s anti-immigrant rhetoric could hurt India. The Modi-Trump friendship could be a savior.
During his re-election campaign, Donald Trump frequently threatened to impose substantial tariffs on imports from various countries, with China receiving the most intense focus—a 60 percent tariff on Chinese products was among his proposals. India, however, was also a notable target; Trump criticized it as a "major charger" of tariffs and vowed to respond in kind.
Now, as Trump prepares to assume office again after his unexpected victory over Vice President Kamala Harris in the U.S. presidential election, his plans for trade barriers and anti-immigrant rhetoric risk escalating tensions in U.S.-India relations.
The U.S. is India’s largest export destination and consistently ranks among its top two trade partners.
“India-U.S. relations could face real strain if Trump follows through on all his campaign promises,” said Biswajit Dhar, a distinguished professor at the Council for Social Development in New Delhi. “If these measures are implemented, it would be very bad news for India.”
However, Dhar noted a glimmer of hope: Prime Minister Narendra Modi’s personal “bonhomie” with Trump could help New Delhi navigate the potentially rocky path ahead.
Trade tariffs
Last year, U.S.-India trade reached nearly $120 billion, with India holding a $30 billion surplus. Bilateral trade has surged by 92 percent over the past decade. However, Trump’s “America First” agenda—which seeks to counterbalance domestic tax cuts through higher import tariffs—now poses a potential disruption to this growing relationship.
While higher tariffs may increase the cost of imported goods for U.S. consumers, they could also impact key Indian export-driven industries, such as information technology, automotive, and pharmaceuticals.
Analysts at the London School of Economics project a GDP loss of 0.03 percent for India and a 0.68 percent reduction for China. “India would be among the hardest hit because the U.S. is our largest market. That’s our primary concern,” said international trade expert Biswajit Dhar. “In his first term, Trump embraced a ‘protectionist mode,’ but now he returns with a mandate for these policies.”
The underlying trade tensions between the U.S. and India, largely subdued over the past four years under the Biden administration due to India's export dominance, could resurface, warned Michael Kugelman, director of the South Asia Institute at the Wilson Center. “These tensions may rise to the surface and intensify under a new Trump administration.”
Walter Ladwig, a senior lecturer in international relations at King’s College London, concurred, noting that “trade has always been a challenging issue in U.S.-India relations” and remained “front and center” during Trump’s earlier term.
Ladwig noted that unlike Biden's "friend-shoring" strategy—which encourages the production of key high-tech items like semiconductors in allied countries—Trump is unlikely to support building such items anywhere outside the U.S. Friend-shoring refers to the idea of shifting production from rival nations, like China, to friendly countries.
Trump’s anti-immigration policy
As India seeks to strengthen its relationship with a new Trump administration, it faces an unusual dynamic, said Anil Trigunayat, a senior Indian diplomat and former trade representative in New York: “While America is leaning towards greater isolationism, Delhi is aiming to become more globally cooperative.”
Trump’s first term brought uncertainty for H-1B visa holders, a program designed for skilled foreign professionals seeking employment in the U.S. Indians make up the majority of these visa holders, accounting for 72.3 percent last year, with Chinese workers a distant second at 11.7 percent.
The denial rate for H-1B petitions rose from 6 percent in 2015 to 24 percent in 2018, a year after Trump took office, and then spiked to 30 percent in 2020 during the COVID-19 pandemic. Trump’s hardline stance on immigration could strain U.S.-India ties, warned Dhar: “Whenever immigration rhetoric intensifies, Indian workers will need to prepare for immediate impact.”
Still, Trump’s second term may differ from his first, said Trigunayat, partly because India has a clearer understanding of his priorities. “I don’t think India’s foreign policy establishment is under any illusions about Trump’s agenda,” he added. “We’ll continue to face challenges, especially regarding trade market access, H-1B visas, and immigration issues.”
The bonhomie and China factor
Most experts agree that the broader U.S.-India relationship is likely to keep strengthening, regardless of who holds power in Washington or New Delhi. “Modi has built a personal relationship with Trump over the past decade—that’s his diplomatic style,” said Harsh Pant, vice president for studies and foreign policy at the Observer Research Foundation (ORF), a New Delhi-based think tank. “This approach will benefit Modi, especially with someone like Trump, who often acts on personal instincts.”
Ladwig of King’s College echoed this view, noting that the “good rapport between Trump and Modi” should bolster bilateral ties.
Both Ladwig and Kugelman added that under Trump, Washington would likely raise fewer concerns about India’s democratic standing or minority rights protections.
Trump’s return could also ease the pressure on India to distance itself from its longstanding ties with Russia, even amid Moscow’s ongoing war in Ukraine.
India’s trade with Russia reached a record high of $65.6 billion this year, though the U.S. recently sanctioned several Indian companies for allegedly supporting Russia’s war efforts.
Trump, however, has advocated for an end to the war in Ukraine and is generally inclined toward diplomacy over military confrontation with Russia. “Some of the tensions that have complicated U.S.-India relations in recent years—especially those involving Russia—are likely to diminish,” said Kugelman.
Meanwhile, shared concerns over China’s growing assertiveness in the Asia-Pacific region are expected to continue strengthening U.S.-India ties under Trump, experts say.
Trump and a ‘rogue state’
Over the past year, U.S.-India relations have been strained by allegations from U.S. prosecutors that Indian agents attempted to assassinate a U.S.-based Sikh separatist. While experts believe Trump is unlikely to “publicly condemn India outright,” his administration is also unlikely to ignore allegations of targeting a citizen on American soil.
“Trump portrays himself as a nationalist, and his politics suggest he could leverage these concerns publicly for political advantage,” said Kugelman. “Not issues of Russia, China, or trade, but this ‘murder-for-hire’ allegation has become the biggest source of tension in the relationship.”
“This could be a harsh wake-up call for India,” Kugelman added.
Pant of ORF, however, believes that “if India was able to handle this crisis under Biden, it’s likely to manage even better under Trump.”
“Today, diplomacy is largely conducted through personal relationships at the highest level,” added Trigunayat, the senior Indian diplomat. “Modi’s strong rapport with Trump will be a valuable and unique access point in the White House.”
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