Donald Trump returns as the 47th President of the US after defeating Kamla Harris. Donald trump’s policies may reshape the economic landscape, impacting trade, taxes and immigration. With both opportunities and challenges for India potential inflation and fiscal deficits. On November 5, 2024, Trump won against Kamla Harris, the Democratic contender, marking his comeback after a four-years hiatus.
Donald Trump’s 5 key points election manifesto that may impact India:
Tax Reforms: As per report, Donald Trump’s policy platform emphasizes extending the 2017 TAX Cuts and Jobs Act, which includes cuts to individuals and estate taxes due to expire in 2025. He proposed lowering the corporate tax rate from 21 per cent to 15 per cent for domestic manufacturers. Additional plans include capping credit card interest rates at 10 per cent making car loan interest payments tax deductible, and abolishing taxes on Social Security benefits. Care Edge highlighted that while these measures may stimulate consumer spending. They carry inflationary risk and could exacerbate the existing fiscal deficit. Already at 6.3 per cent GDP, with government debt at 123 per cent of GDP.
Trade Tariffs: Trump has outlined an aggressive stance on trade, proposing 60 per cent tariffs on Chinese imports and 10-20 per cent tariffs on imports from another nations. He also suggested imposing 100-200 per cent tariffs on vehicles manufactured in Mexico to promote US job growth discourage. The circumvention of tariffs by Chinese manufacturers using Mexican plants. While these tariffs could disrupt global trade flows and rise domestic prices. They might provide India with an opportunity to benefits from a supply chain shift away from China. However, CareEdge cautioned that a broader trade slowdown could negatively impact India.
Foreign Policy and Defense: The report further informed that Trump pledged to end ongoing conflicts, such as the Russia-Ukraine war and Middle East tension. Although without detailed plans for achieving these goals. He reiterated support for Israel and called for NATO members to meet the defense spending target of 2 per cent of GDP a metric many members currently fall short of.
Immigration and Outsourcing: Stringent immigration policies are part of Trump’s platform, with proposed penalties for visa overstays and unauthorized entries. CareEdge noted that this could affect. India’s IT Sector which relies heavily on the US market and receives a significant portion of US work visas.
Outlook for India and Global Markets: As per reports, India could witness the return of Foreign Portfolio. Investment inflows as greater clarity on Trump’s policies emerges potentially easing currency pressures. CareEdge noted that passive inflows related to India’s inclusion in global bond indices could also support the rupee. The impact on other Asian currencies with significant exposure to China remains uncertain, particularly as Beijing’s responses to the tariffs will play a crucial role.
