India not too perturbed by Trump's disruptive agenda for businesses

Today, Donald Trump, well known for his discomfort with global rules that constrain unilateral actions by individual countries, will be sworn in as the 47th President of the United States of America, a country that has played a leading role in developing internationally accepted rules in various spheres, especially since the end of the Second World War. 

In his first term, Trump took his country out of the Paris accord on climate change and the trade negotiations for a Trans-Pacific Partnership agreement between the Pacific Rim countries. He unilaterally raised the tariffs on steel, aluminium etc. invoking bogus excuses of national security concerns.  He wrecked the dispute settlement mechanism at the World Trade Organisation by not allowing appointment of enough referees to hear appeals. He planned to leave the World Health Organisation.  

With a bigger mandate for his second term, Trump has promised to hike the tariffs across the board and levy higher import duties on goods from China, Mexico, Canada and India. He has also talked of curbing immigration and integrating Canada, Greenland and Panama Canal with his country. How far he will carry out his threats is unclear but any apprehensions about Trump not respecting many global rules are not without basis. All the countries are now preparing their own responses, knowing very well that the earlier norms of engagement with the US may be upended under the Trump administration.  Also Read: Donald Trump inauguration LIVE updates 

In India, there is a quiet confidence that an agreement can be reached with the Trump administration over reduction of tariffs on some items like motorcycles or liquor without hurting the domestic producers. There is also a readiness to impose retaliatory tariffs in the event of any unilateral India specific actions by the US. Certainly, our government would not like to be seen as giving in to pressure tactics. A deal where both sides can claim some wins would best serve the interests of the two countries.

On the issue of visas for our professionals going to the US for delivering certain services, the Trump administration is more likely to consider the interests of the business entities at home and take a call. If enough visas are not forthcoming, more US companies might prefer to have a presence in India to have the services delivered from India and many companies already having such presence in India might strengthen such capabilities. 

The US-China trade war is likely to intensify under Trump, who has repeatedly accused China of many wrong doing such as stealing intellectual property. If there is any loss of market share in the US, China is likely to be more aggressive in other markets making it difficult for Indian exporters to compete at lower prices. Besides, some US and Chinese companies may divert their investments away from China and India may be one of the beneficiaries. Trump might make it more difficult for Iran and Russia to sell or transport their crude oil, forcing India to source oil from other countries at market prices. The international price of crude oil may also spike if the supplies fall short of the demand. Trump might relegate climate change issues to the background. 

So, our businesses are not too perturbed by the disruptive agenda of Donald Trump but some other countries and international institutions can have more anxious days ahead.  

email: tncrajagopalan@gmail.com