Future of US-India Bilateral Trade: Outcome of discussions between President Trump and Prime Minister Modi

Re-elected after a four-year break, President Donald Trump returned to White House and signed series of executive orders on his Inauguration Day, January 20, 2025.

- Dr. T. K. Jayaraman

These orders reaffirmed his commitment to his signature slogan- “Make America Great Again” (MAGA)—by implementing both domestic and international measures.

On the domestic front, key policies included a corporate tax rate reduction from 25% to 15% and stricter enforcement of immigration laws, including deportation of illegal migrants, Internationally, Trump's focus has been on restoring America's economic dominance by rolling back globalization and freer trade measures. His administration has begun to impose higher tariffs on imports, particularly from neighboring Canada and Mexico, and of course China.

The globalization reversal: A setback for developing nations

Globalization has significantly benefited developing economies, spurring GDP growth and increasing per capita incomes. The reforms that fueled this growth included:

• Moving away from socialist economic models.

• Embracing market-driven, incentive-based policies.

• Encouraging private sector participation and global trade.

A striking example of this transformation is the communist China. It successfully integrated capitalist strategies into its development framework. Vice Premier Deng Xiaoping famously justified this shift by quoting a Chinese proverb: “It doesn't matter if a cat is black or yellow, as long as it catches mice.” This pragmatic approach propelled China to become the world's second-largest economy, surpassing Japan.

However, Trump remains a staunch opponent of globalization. His “America First” stance favors economic protectionism over free trade. Unwilling to engage in direct military conflicts, he has instead opted for a tariff war, targeting emerging markets- including India, which he previously labeled “the King of Tariffs.”

Understanding tariffs: Tools of trade protection