Midterm Losses Unlikely To Soften Trump’s Trade Stance Towards India: Experts

 

New Delhi: The midterm setback is unlikely to change Donald Trump's trade policy as both Democrats and Republicans favour economic nationalism and protective tariffs. According to latest report by Global Trade Research Initiative (GTRI), Trump can continue using existing executive powers to impose trade pressure without Congress. With his foreign policy facing challenges with Russia, China and Iran, he may increase pressure on India for a trade deal to demonstrate American influence, adds the report.

As both Democrats and Republicans now favour economic nationalism, domestic manufacturing and strong supply chains, experts believe tariffs are likely to remain the new normal for the foreseeable future. With Democratic lawmakers also supporting protective tariffs to safeguard local union workers, overall trade stance of the US is unlikely to change.

To act without Congressional approval, the President is likely to continue relying on executive powers, such as sections 232 and 301. Experts also believe Trump's temperament and approach are unlikely to change in the short term.

 

According to the report, leaders on both sides have been saying for months that the trade deal is almost ready, though its completion was likely delayed because the US offer remained unclear. Trump will now use his executive powers to pressure India for a quick deal that secures market access for US agricultural and industrial goods, alongside other major concessions for US companies.

It also says that the trade deal India is negotiating with the US differs fundamentally from all other FTAs India has signed. In standard trade agreements, both countries cut or remove their regular WTO import duties, known as Most Favoured Nation (MFN) tariffs. Under the US- India framework, Washington will retain its MFN tariffs, while India must eliminate or reduce its MFN tariffs on most industrial goods and many agricultural products.

Under the February 6 US-India joint statement, India will also align its security and economic policies with Washington, commit to buying US$ 500 billion in US goods over five years, and ease domestic regulatory oversight of American imports.

 

In exchange, the US offers no direct reciprocal concessions. Instead, Washington may be using tariff threats to force compliance under its Graham Act and Section 301, especially over India’s Russian oil purchases. Even if India signs the deal, the US could still impose additional tariffs of 15-18 per cent on top of regular MFN rates. The deal will essentially be economic coercion, adds the report.

 

The report also mentioned that in April 2025, the White House had imposed reciprocal tariffs through executive action and offered to cut these additional levies — not standard MFN duties — to pressure major trade partners like Japan, the EU, the UK, South Korea, Vietnam, Malaysia etc., into signing unequal deals.

India followed a similar path, securing the February 6 joint statement, in which the US pledged to lower reciprocal duties from 25 per cent to 18 per cent. However, the US Supreme Court’s February 20 ruling, in Learning Resources, Inc. vs Trump, struck down those executive reciprocal tariffs under the IEEPA, removing Washington’s main bargaining tool overnight, it adds.

 

According to GTRI founder Ajay Srivastava, with that ruling, the US lost its main concession, prompting all countries barring India to stop negotiating such one-sided trade deals. The resulting deal remains entirely one-sided, driven by US tariff threats over Russian crude purchases — even as Washington imports Russian-derived diesel itself, and overlooks China’s massive Russian oil imports.

He also stressed that India should not mistake relief from threatened tariffs for a balanced trade agreement. Opening its markets, committing to large purchases, and limiting its policy choices, would carry lasting costs, while any US tariff relief could prove temporary.

New Delhi should insist on clear, enforceable reciprocal concessions, consistency with WTO rules, and full freedom to protect its energy security and development priorities. The pressure to announce a deal must not outweigh the need to secure one that serves India’s long-term interests.

 

Talking just after midterm election results, former Chairman of the Engineering Exports Promotion Council (EEPC), Arun Kumar Garodia, said tariffs are likely to become the new normal in the coming days, as both US Democrats and Republican parties see benefits in using them. Despite the midterm setback, Trump will retain significant powers, but the Democrats increased strength will make it harder for him to take decisions as freely as before. While this may not put a complete check on his authority, it will certainly limit his room to act.

The political developments could also have a short-term impact on stock markets. The Democrats are likely to push for the removal of tariffs or repeal of the provisions that allow the President to impose them. Some tariffs may be reduced under pressure, but a complete rollback is unlikely. Tariffs have now become a political weapon in the US, and both parties are likely to use them to serve their own interests.

 

Talking to ETV Bharat, former diplomat Rajiv Dogra said former US President Bill Clinton once recalled knowing Donald Trump for nearly 25 years. Speaking about tariffs, Clinton said Trump had told him even then that he would impose tariffs if he became President. Clinton however had cautioned him that tariffs ultimately amount to a tax paid by American taxpayers, and expressed concern that Trump tends to listen only to what he wants to hear.

Dogra stressed that this gives the impression that Trump is unlikely to be influenced by the changed political circumstances and will continue to pursue what he has already decided. His old ways and approach do not seem to have changed, as reflected in his recent statements.

 

Therefore there is unlikely to be any immediate shift in his policies towards India. Whether it is the deportation of Indian nationals, visa-related issues, remarks concerning Sikh truck drivers, or concerns surrounding computer professionals, these issues are unlikely to see any immediate change.

For India, he said the increased influence of the opposition in the US Congress is a positive development. However its ability to influence Trump's decisions will remain limited. The one issue the world will be watching very closely is how Trump deals with Iran, added Dogra