Abstract：President Donald Trump’s Republican Party lost massively to its counterpart, the Democrats, in the Midterm election. This unprecedented loss is going to shift the dynamics of the existing India-US Trade Deal. Although trade policy and executive agreements remain largely within the White House’s domain, losing congressional control significantly changes the leverage, timeline and oversight surrounding the final agreement.
President Donald Trump‘s Republican Party lost massively to its counterpart, the Democrats, in the Midterm election. This unprecedented loss is going to shift the dynamics of the existing India-US Trade Deal. Although trade policy and executive agreements remain largely within the White House’s domain, losing congressional control significantly changes the leverage, timeline and oversight surrounding the final agreement.
Contents
Top Economic Shifts Await India and US
Complex, High-stakes Trade Deal Dynamics
Market experts highlighted that Trumps loss in the US Midterm election results makes the India-US trade deal a complex, high-stakes affair. They anticipate a greater push from the Donald Trump-led administration for a foreign policy win. This will likely speed up the negotiations surrounding the deal. According to experts, a softer US dollar, easing Treasury yields and lower crude oil prices are likely to support Foreign Institutional Investor (FII) inflows, reduce inflationary pressures and enhance corporate profitability. Experts also expect a sharp increase in precious and base metal prices.
According to Seema Srivastava, Senior Research Analyst at SMC Global Securities, the setback for Trump in the US midterm elections may heighten the pressure on him to secure swift, tangible foreign policy victories. White House may aggressively exercise its powers to quickly execute a bilateral trade agreement with India. This will further intensify pressure on New Delhi to agree to trade terms quickly. This urgency may lead to significantly tougher negotiating terms, with Washington pushing massively for sweeping access to Indias markets, especially sensitive sectors such as agriculture and dairy, while maintaining strict tariffs on Indian goods.
The midterm election results have made domestic opposition stronger within a newly empowered legislative branch. This implies a far greater scrutiny and potential pushback in Congress. This political shifting landscape may force India to manage heightened US pressure for a quick agreement while safeguarding the interests of the domestic economy, agricultural livelihoods and strategic independence against one-sided trade terms.
Relief on Russian Oil Sanctions, H1-B Visa Issues
Recent US moves, such as high filing fees for H-1B petitions, faced massive scrutiny from Democrats who went against economic disruptions for American tech firms relying on Indian talent. Increased oversight could rein in further restrictive measures on skilled immigration, according to Avinash Gorakshkar, Founder of Avinash Mentor Research. He even added that the Trump-led administration may soften enforcement on nations buying Russian oil, or opt for pragmatic waivers as Congress pushes back against policies that can inflate global energy prices. India can capitalize on this potential shift to manage its energy security.
FPI Flow to Increase in India
The US midterm election results will likely pressure the US dollar and US bond yields, creating possibilities for increased FPI flow in India, according to Amit Goel, Chief Global Strategist at PACE 360.
Conclusion
The US midterm election results are set to change the dynamics of the India-US trade deal, with Democrats likely to scrutinize it more deeply, pressuring both the Trump-led Republican government and New Delhi to sign the deal quickly. The contours of the deal targeting sweeping access to Indias markets, including agriculture, may face increased deliberations between the two nations in the near future.
Note: The news is prepared based on a report published on Livemint.
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