In this episode of State of the economy Podcast, Amiti Sen speaks with Professor Biswajit Dhar, 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 follows the unfolding of Trump’s second term, pressing questions arise about how his policies will shape India’s trade, manufacturing, immigration and global standing.

Professor Dhar highlights a major concern for India: Trump’s protectionist trade policies. “Trump was extremely protectionist in his electoral campaign,” he notes. “The main goal of his economic plan is to use tariffs to protect American manufacturing.” This continuation of Trump’s heavy-handed tariff approach, which was a hallmark of his first term, could have far-reaching consequences for India. Dhar warns that India, of which the United States is the top export destination, could face serious challenges if Trump raises tariffs on products such as electronics, pharmaceuticals and medical devices . “Indian exports to the United States are not doing very well,” he emphasizes. “If Trump continues his speech, it will be bad news for India. »

Trump’s well-known penchant for tariffs, expressed in his famous statement “I love tariffs”, threatens India’s trade ambitions, particularly in key sectors where India hopes to increase its exports to the United States. Dhar warns that the protectionist United States under Trump could limit India’s access to its largest market.

Another important talking point is the uncertainty surrounding India’s semiconductor ambitions. Despite recent collaboration between the US and India in this sector, Professor Dhar remains skeptical about the future of these projects 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 United States will likely prioritize its own domestic production over partnerships with India. This uncertainty could hamper India’s efforts to become a key player in the global semiconductor market, despite its growth potential in the sector.

Professor Dhar also addresses the weakening of the World Trade Organization (WTO) dispute settlement mechanisms during Trump’s first term, which made it harder for countries like India to address trade injustices . He warns that Trump’s preference for bilateral agreements over multilateral agreements could lead to a world of “unilateralism,” in which countries are forced to manage trade disputes without the protections traditionally offered by multilateral forums like the ‘WTO. “The WTO is already losing its relevance,” observes Dhar. “Trump has made it clear that he does not want to work through multilateral organizations.”

On immigration, Professor Dhar highlights the potential impact of Trump’s stance on work visas, particularly H1B and L1 visas, which are crucial for India’s services sector. “Trump has made clear his desire to bring jobs back to America,” he said. “This could directly affect India’s technology and services sectors, which rely heavily on the movement of skilled professionals to the United States.” As Trump’s speech focuses on reducing immigration and boosting domestic employment, India could face significant hurdles in sending talent to the United States to support its services sector in full swing.

Finally, the conversation turns to the broader geopolitical implications of a Trump administration, particularly regarding U.S.-Russia relations and tensions with China. Professor Dhar suggests that Trump’s policies could shift global alliances in unpredictable ways, putting India in a difficult position. “Relations between Trump and Putin could become closer,” he explains. “It could change a lot of things, especially if it leads to a more divided world order. » Furthermore, Trump’s approach to China, which is likely to remain confrontational, could have indirect consequences for India as tensions in the region escalate.

Listen 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

The Indian 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 appear to be on fire at full throttle.