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In this episode of the State of Economy Podcast, Amiti Sen speaks with Professor Biswajit Dhar, a distinguished economist and former professor at Jawaharlal Nehru University, about the potential economic impact of Donald Trump’s return to the US presidency, particularly for India. As the world closely watches Trump’s second term unfold, there are pressing questions about how his policies will shape India’s trade, manufacturing, immigration, and global standing.
Professor Dhar highlights a key concern for India: Trump’s protectionist trade policies. “Trump has been sounding extremely protectionist in his election campaign,” he notes. “The main focus of his economic plan is to use tariffs to protect the US manufacturing sector.” This continuation of Trump’s tariff-heavy approach, which was a hallmark of his first term, could have far-reaching consequences for India. Dhar warns that India, which has US as its largest export destination, could face serious challenges if Trump raises tariffs on goods like electronics, pharmaceuticals, and medical devices. “India’s exports to the US have not been doing very well,” he points out. “If Trump carries through his narrative, it will be bad news for India.”
Trump’s well-known fondness for tariffs, expressed in his famous statement, “I love tariffs,” spells trouble for India’s trade ambitions, particularly in key sectors where India has been hoping to increase exports to the US. Dhar cautions that a protectionist US under Trump could limit India’s access to its largest market.
Another significant topic of discussion is the uncertainty surrounding India’s semiconductor ambitions. Despite recent collaboration between the US and India in this sector, Professor Dhar remains sceptical about the future of these plans under Trump. “India is planning to become a semiconductor manufacturing hub,” he says. “But with Trump’s protectionist stance, I think there are serious doubts. The US will likely prioritise its own domestic manufacturing over partnerships with India.” This uncertainty could stall India’s efforts to become a key player in the global semiconductor market, despite its potential for growth in the sector.
Professor Dhar also addresses the weakening of the World Trade Organisation’s (WTO) dispute resolution mechanisms during Trump’s first term, making it more difficult for countries like India to address trade injustices. He warns that Trump’s preference for bilateral deals over multilateral agreements could lead to a world of “unilateralism,” where countries are left to navigate trade disputes without the protections that multilateral forums like the WTO traditionally offer. “The WTO is already losing relevance,” Dhar observes. “Trump has made it clear that he doesn’t want to work through multilateral organisations.”
On immigration, Professor Dhar highlights the potential impact of Trump’s stance on work visas, especially H1B and L1 visas, which are crucial for India’s services sector. “Trump has been very vocal about wanting to bring jobs back to America,” he says. “This could directly affect India’s technology and services industries, which rely heavily on skilled professionals moving to the US.” With Trump’s rhetoric focusing on reducing immigration and boosting domestic employment, India could face significant hurdles in sending talent to the US to support its burgeoning services sector.
Finally, the conversation turns to the broader geopolitical implications of a Trump administration, particularly in relation to US-Russia relations and tensions with China. Professor Dhar suggests that Trump’s policies could shift global alliances in unpredictable ways, putting India in a challenging position. “Trump’s relationship with Putin could become closer,” he explains. “That could change a whole lot of things, especially if it leads to a more divided global order.” Additionally, Trump’s approach to China, which is likely to remain confrontational, could have indirect consequences for India as tensions in the region escalate.
Listen in to this insightful discussion on how Trump’s second term could reshape the global economy.
(Host: Amiti Sen, Producer: Siddharth Mathew Cherian)
About the State of the Economy podcast
India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders.
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