Iqra Nisar
Upon completing his inaugural 100 days in the Oval Office on April 29, 2025, Donald Trump’s second term has witnessed a pronounced resurgence of his ‘America First’ agenda characterized by an array of policy shifts within U.S. Domestic politics. His inaugural address had set the tone for upcoming events, emphasizing on themes of nationalism, economic protectionism, and strict immigration policies. Trump’s ideological stance, and the key issues that resonate with his constituent base, warrant examination as he initiates bold, polarising measures. This period has been characterised by efforts aimed at reassessing and recalibrating the US role within the global economic framework, with a particular focus on rebalancing its bilateral relationships with strategic partners, such as India, amidst an environment of economic uncertainty created by pivotal policy shifts.The initial three months of Donald Trump’s presidency have ushered in a period of intense disruption, marked by heightened domestic tensions due to immigration policies and escalating global diplomatic conflicts due to the trade policy.
The Tariff Offensive
The commencement of Trump’s second term has been defined by an aggressive trade policy, exemplified by the implementation of wide-ranging tariffs. Trump invoked the International Emergency Economic Powers Act this month to declare a national emergency, highlighting the persistent trade deficit that poses an economic and national security risk. This development paved the way for a 10 % baseline tariff on all imports, supplemented by steeper reciprocal tariffs focusing on countries boasting significant trade surplus. Countries such as India face punitive tariffs of 26% on their exports, while China contends with an extraordinary 145 % tariff, a reflective stance by Trump as his opposition to perceived unfair trade practices, including high tariffs on American goods and currency manipulation.
Critics argue that Trump’s stance risks exacerbating interdependence among the global economy. The International Monetary Fund (IMF) warns that the trajectory risks sparking a global recession as retaliatory measures and disruptions to supply chains worsen economic stability worldwide. In the specific case of India, these tariffs beset the nation with a dual-edged dilemma-disrupting established trade patterns while also creating opportunities for recalibrated economic and strategic alignments. Furthermore, tariff on Indian exports poses a pressing conundrum within sectors reliant heavily on the U.S. market, such as textiles, pharmaceuticals, and IT services, threaten competitiveness and potential job losses and economic strain but tariff imposed on China coupled with elevated rates on competitors like Vietnam, could position India to capture market share vacated by these Asian countries. The unpredictability of Trump’s leadership and the tactics of leveraging tariffs as bargaining chips have the potential to introduce significant volatility into the trade dynamics of Indian businesses. If India were to impose retaliatory tariffs, the probability of an escalation into a trade war would increase, posing a substantial threat to the economic recovery of both nations. Consequently, the Indian government must navigate a precarious diplomatic landscape, weighing the competing demands of domestic constituencies and international contingencies. Notably, the government has been exploring the possibility of a bilateral trade agreement with the United States, which might help mitigate the impact of tariffs and concurrently strengthen diplomatic relations. The Indian government must cultivate an equally judicious approach-crafting a response, maintaining meaningful relationships with the U.S. while ameliorating backlash from opposition groups, and forestalling the onset of a full-fledged trade war.
Crackdown on Immigrants
Trump invoked the International Emergency Economic Powers Act (IEEPA) in April, citing the U.S. persistent trade deficit as a threat to economic and national security. The Trump administration’s immigration policy has got a significant push in its initial three months, during which it deported 139,000 individuals. He wants to challenge the US Constitution and endeavours to reframe the 14th Amendment, birthright citizenship. However, this legal challenge is currently under scrutiny in the federal court. The administration’s comprehensive strategy for curbing immigration, coupled with an agenda of aggressively deporting individuals, has effectively targeted sanctuary cities refusing to collaborate with immigration enforcement initiatives. Notably, the second Trump administration’s revised immigration policy, set in motion on January 20, 2025, extends to substantive alterations in both lawful and unlawful immigration into the United States.
These policies rooted in an “America First” ideology have far-reaching consequences for India, particularly given the considerable presence of Indian professionals and students in the United States on labour and educational visas, as well as the substantial undocumented Indian population. The Trump administration has rescinded policies formulated by the Biden administration, including the sensitive locations’ safeguard which has been utilised to protect institutions like hospitals and schools from immigration enforcement. As a result, instances of enforcement actions in establishments inhabited by Indian immigrants have increased. The administration has also discontinued humanitarian parole programs for migrants from Cuba, Haiti, Nicaragua, and Venezuela, prompting speculations about similar actions targeting other nations, including India. In February, disturbing images depicting handcuffed and shackled undocumented Indian immigrants on a US-bound military flight reverberated throughout Indian news outlets. The incident underscored the repercussions of the Trump administration’s stringent measures on the lives of numerous vulnerable Indian citizens who had risked inordinately to arrive in the US. The mistreatment faced by Indian immigrants, that is, the way they were sent back to India, had sparked a controversy. The Indian Government had to contend with the US administration’s immigration policies, adopting a cautious approach while managing domestic discontent. Initially, a domestic outcry ensued, yet Modi’s government has managed to play a holding game.
Furthermore, the Indian IT sector is also experiencing significant disruptions due to tightened regulations on H-1B visas, which comprise a substantial portion of their business, threatening an industry valued at $150 billion. Notably, a considerable 72% of H-1B visas are allocated to Indians, underpinning their central role in fueling the US tech industry and remitting revenue to India. The proposed visa restrictions could severely disrupt Indian companies’ business models, potentially forcing them to seek alternatives in countries like Canada or Australia. The Silicon Valley’s Indian talent base may face labour shortages in the event of intensified visa restrictions, with prominent Indian-American tech leaders publicly advocating for the program’s retention. The uncertainty surrounding H-1B visas, coupled with student visa clampdowns and debates on birthright citizenship, poses significant challenges for Indian professionals, students, and families in the US. Ultimately, this hinders the economic and innovation contributions of the Indian-American community, which generates substantial income and revenue. While the US-India bilateral relationship offers opportunities for addressing these tensions, navigating these policies necessitates resilience, strategic foresight, and the concerted efforts of the Indian diaspora to exert its growing influence in American politics, thereby safeguarding broader strategic and economic cooperation.
Conclusion
Donald Trump’s second term is likely to stick to his unconventional approach, breaking away from the post-war trade rules that prioritize cooperation and multilateral agreements. Trump’s relationship with Indian Prime Minister Narendra Modi has experienced its share of ups and downs. Despite several areas of agreement, including the sale of fighter jets, mutual efforts to combat terrorism, an economic project connecting India to the Middle East and Europe, and collaborative work on nuclear energy, there are also plenty of challenges to contend with like the visa restrictions and the tariff policy. The inaugural 100 days of Trump’s presidency have marked the beginning of a tumultuous period in global politics, primarily due to his trade tariffs which are having far-reaching effects worldwide. For India, this development presents both a challenge to its economic resilience and an opportunity to capitalize on emerging prospects. Trump’s tariffs provide a chance for India to strengthen its ties with the U.S., particularly as the U.S. seeks dependable partners in the Indo-Pacific region to counterbalance China’s influence.
To effectively safeguard its interests, India must adopt a multifaceted approach consisting of negotiations with the U.S., diversification of trade, and bolstering domestic capabilities. As global trade becomes increasingly fragmented and rivalries between powerful nations intensify, India’s capacity to adapt and respond proactively will determine its standing in the current era.
(The author is PhD Scholar-International Relations)
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