Implications of Trumpʼs Trade Policies on India: Navigating the Challenges

Team Exportduniya
Feb 22
2 min read

Updated: May 14

Two men in suits, one gesturing, with red arrow declining. Blue background with India and economic symbols. Text reads "Implications of Trump's Trade Policies on India: Navigating the Challenges."

The return of President Donald Trump to the White House has marked a significant shift in global trade dynamics, with his protectionist policies set to impact various industries across India. Indian businesses must be prepared to adapt to these changes, which include higher tariffs on exports, stricter visa regulations, supply chain shifts, and potential fluctuations in investment and currency. Here’s how Trump’s trade policies could affect India and what strategies Indian businesses can employ to stay ahead:

Tariffs on Exports

Impact: Trump's tariffs have imposed higher duties on key Indian exports such as pharmaceuticals, textiles, and auto parts. For instance, a 26% tariff on Indian imports to the US could significantly affect sectors like textiles and auto components, which rely heavily on the American market.
Pharmaceuticals: Despite initial exemptions, the threat of tariffs on pharmaceuticals could increase costs for US consumers and challenge Indian pharma companies, which are major suppliers of generic drugs to the US.
Textiles: While India faces a 26% tariff, its competitors like Vietnam and Bangladesh face even higher rates, potentially giving India a competitive edge in the US textile market.

IT & Visa Rules

H-1B Regulations: Stricter H-1B visa rules could affect Indian IT firms, which rely heavily on these visas for their US operations. This may lead to increased costs and operational challenges for IT companies.
Impact on IT Sector: The IT sector, which generates a significant portion of its revenue from the US, could see a slowdown due to reduced discretionary spending and stricter visa policies.

Supply Chain Shifts

“Make in America” Initiative: Trump’s emphasis on domestic manufacturing could push companies to diversify their supply chains and invest in local production within the US. This might lead Indian businesses to explore new markets beyond the US.
Opportunities for India: The differential tariffs compared to other Asian countries could attract industries like footwear and garments to India, providing opportunities for growth in these sectors.

Investment & INR Fluctuations

Trade Uncertainty: The unpredictability of US trade policies could lead to capital volatility and fluctuations in the Indian Rupee (INR), affecting investment flows into India.
Mitigation Strategies: Indian businesses should focus on diversifying their export markets and strengthening local supply chains to reduce dependence on any single market.

Preparing for the Future

Expand to New Markets: Beyond the US, explore opportunities in Europe, Africa, and Latin America to reduce dependence on a single market.
Strengthen Local Supply Chains: Invest in local manufacturing and supply chain resilience to mitigate risks associated with global trade uncertainties.
Invest in Automation & Workforce Upskilling: Enhance competitiveness by adopting automation technologies and upskilling the workforce to adapt to changing market demands.

In Conclusion

While Trump's trade policies present challenges for Indian businesses, they also offer opportunities for strategic growth and diversification. By staying informed, adapting quickly, and leveraging new market opportunities, Indian companies can navigate these complexities and thrive in the evolving global trade landscape.