2024 US elections: Donald Trump’s return to the White House as the 47th President of the United States could lead to at least some direct challenges for India, including higher tariffs and visa restrictions, as well as possibly greater volatility in foreign exchange markets. There are also concerns about high inflation in the US following its fiscal stance and the Fed making fewer cuts; This may have an indirect impact on monetary policy decisions in other countries, including India.

It’s still early days for now. Policymakers are in wait-and-watch mode to see how Trump moves forward with his Presidency. The new US President’s economic policy is expected to focus on higher tariffs on all imports into the country (generally 10 percent and up to 60 percent from China), immigration restrictions, and lowering the corporate tax rate. Up to 15 percent for all companies manufacturing in the United States. All of this could ultimately lead to higher inflation in the US and subsequent action by the Federal Reserve.

India had a quote during Trump’s Presidential election campaign in which he described the country as “abusing” import tariffs; This was a claim that echoed his October 2020 statement labeling India as the “Tariff King”.

Experts think India is unlikely to suffer losses and is likely to face higher tariffs, either directly or indirectly. Experts believe Trump’s presidency will likely expand tariffs beyond China to other countries, possibly including India.

“Trump could pressure India to lower tariffs and impose higher tariffs on Indian goods, especially in sectors such as autos, textiles, pharmaceuticals and wine, which could impact revenue by making Indian exports less competitive in the US market.” economic think tank Global Trade Research Initiative (GTRI).

The US is India’s largest export partner with total exports of $77.5 billion in FY24 and total bilateral trade is around $120 billion.

Geojit Financial Services Chief Investment Strategist VK Vijayakumar pointed out that although Trump’s anti-China policy has positive implications for India, it is important to understand that Trump has criticized ‘India’s high tariffs’ and will not hesitate to implement them. Customs duties on Indian exports to the USA.

However, there is an opposing view that higher tariffs on Chinese goods could benefit India. Similarly, focusing on the China+1 strategy can also boost the Indian industry. The GTRI report stated that Trump’s renewed support targets could lead the US to reduce its dependence on Chinese manufacturing and create new openings for India to supply key products in sectors such as semiconductors and electronics.

Concerns also remain that Trump’s policies on the H-1B visa policy could have a significant impact on India’s IT sector. “Stricter policies on outsourcing and possible restrictions on H-1B visas could disrupt India’s IT sector, which relies heavily on the US market. The reduction in outsourcing could impact the earnings of Indian firms and make it difficult to recruit skilled talent, the GTRI report said.

Analysts also remain cautious about the impact of these policies on the U.S. economy and global markets. While in the short term these measures may support US growth, in the medium and long term they could lead to higher inflation and a possible slowdown in the Chinese economy, creating a ripple effect.

“The medium-term implications are less straightforward. This is because tariff increases could lead to inflation, negatively impact consumer demand, and negatively impact U.S. manufacturers that depend on global imports. Moreover, if broader tariffs were imposed on all U.S. imports—increasing the risk of retaliation from other countries.” “Global growth could slow and economies such as China and the Eurozone could become particularly fragile.” Attention was drawn to a report prepared by HDFC Bank’s Treasury Research Desk.

Analysts also expect the Indian currency to weaken as the dollar strengthens. “The rupee will depreciate further towards the 84.20-84.50 range in the next two to three months before moving to 84.50-85 in the first half of 2025. We do not rule out an eventual breach of the 85.0 level in the next 8 years.” We do not” -12 months for the couple,” the report said.

A report prepared by Emkay Global Financial Services stated that there will be a natural weakening trend for the Indian Rupee, led by CNY, while the slight flattening in Gsec may return. “The spread of bond/currency volatility through global financial markets will mean that the goal of financial stability may even take precedence over inflation management for the Reserve Bank of India,” the report said.