As a second Trump term in the White House looms, India faces a renewed challenge in managing its trade relationship with the United States. During Mr Donald Trump’s earlier term as President, India experienced direct and often aggressive pressure to lower tariffs on specific American goods, notably high-end motorcycles, in line with his “America First” vision. This stance demanded concessions to “balance” trade relationships, typically prioritising American economic interests.

While recent years under the Biden administration saw a more measured approach, the return of Mr Trump’s transactional diplomacy would likely mean a return to tough negotiations for India. The country’s trade with the US is a high-stakes matter: the US remains one of India’s largest markets for exports, ranging from engineering goods and pharmaceuticals to textiles and jewellery. Giv en the reliance on these sectors to drive India’s economic growth, India stands to gain considerably from maintaining strong trade ties with the US. However, Mr Trump’s probable emph asis on India reducing tariffs to benefit Ame rican exp – or ters poses a direct challenge. From India’s perspective, managing this relationship without conceding too much in sensitive areas like dairy or certain con tro lled medical devices will be critical.

On the flip side, Mr Trump’s return may also present opportunities for India, especially amid the US’s increasing push to diversify its manufacturing base away from China. This “China + 1” strategy, which gained traction post-pandemic, aims to lessen dependence on Chinese production and has al ready opened doors for Indian manufacturers to access Western markets. To leverage this strategy, India needs a well-planned approach that not only addresses US concerns but also ensures that Indian exports remain competitive. However, managing the Chinese influence brings additional complexities. As the US and Europe impose stricter restrictions on Chinese imports, there is a risk of China turning to other markets like India to offload surplus goods at reduced prices.

This could lead to a flood of lowcost Chinese products in the Indian market, affecting domestic manufacturers, especially in sectors relying on intermediate goods. While anti-dumping measures may help curb this threat, overuse of these measures could harm India’s small and medium enterprises that rely on affordable raw materials for production. To navigate these challenges, India must be prepared with a balanced, strategic approach to negotiate effectively while safeguarding domestic interests. Offering concessions on non-sensitive items like high-end luxury goods could pave the way for favourable terms without significantly impacting the domestic market.

At the same time, India must be cautious in protecting areas of national interest, ensuring any relaxation in duties is calculated and controlled. Ultimately, as India weighs its trade strategy, the larger goal should be clear: maximise gains in exports and economic cooperation while minimising vulnerabilities. The trade relationship with the US, while challenging, offers vast opportunities that India cannot afford to overlook. By taking a pragmatic and flexible approach, India can work toward a mutually beneficial relationship, seizing the economic opportunities created by global shifts while maintaining its strategic autonomy