US Election Impact: Boosting Bilateral Trade Gains

If Donald Trump were to return to the White House, India-US trade ties could see notable gains, particularly in sectors like defense, energy, and technology. Trump’s previous administration emphasized increasing trade volumes and reducing trade imbalances, which included advancing bilateral energy partnerships that benefited India’s import portfolio for oil and LNG. His administration’s strong defense cooperation approach led to substantial arms sales, positioning India as a key player in the Indo-Pacific strategy. Additionally, a renewed Trump administration might prioritize reducing regulatory barriers, encouraging more US investments in India’s growing markets. While some tariffs could resurface under a Trump administration’s emphasis on fair trade, the potential for expanded U.S. investments in digital infrastructure, manufacturing, and renewable energy aligns with India’s economic priorities. These areas of cooperation could help India leverage US expertise and capital, strengthening its economy and strategic global standing.

The US-India relationship has evolved significantly over the past 24 years under both Republican and Democratic presidencies, yielding a range of economic and strategic gains for India. Since 2000, India has leveraged its partnership with the US to strengthen trade, technology, defense, and investment channels, although the nature and focus of these gains have varied depending on each administration's priorities.

Indo-US Bilateral Trade
India’s flourishing trade ties with the United States have seen remarkable growth over recent years, cementing the US as India’s leading trading partner. In FY 2020-21, bilateral trade stood at a robust $80.5 billion, with Indian exports to the US totaling $51.62 billion against imports of around $29 billion, producing a favorable trade surplus for India. This economic synergy accelerated further in FY 2021-22, with bilateral trade soaring to $119.42 billion. The heightened demand for Indian exports, notably in petroleum products, polished diamonds, and pharmaceuticals, boosted exports to $76.11 billion, while imports from the US rose to $43.31 billion, further amplifying India’s trade surplus to nearly $32.8 billion.

This upward trajectory continued into FY 2022-23, when trade reached a remarkable $128.55 billion, marking a notable 7.65 per cent increase from the prior year. Exports to the US grew to $78.31 billion, propelled by strong sectoral performance, while imports rose to $50.24 billion. These figures reflect the deepened economic integration and shared strategic vision between the two nations, highlighting the U.S. as a pivotal partner in India’s trade landscape, surpassing China and underscoring the robust and mutual benefits of this bilateral trade partnership.
The bilateral trade between India and the US stood at $118.28 billion in 2023-24. Washington was the top trading partner of New Delhi during 2021-22 and 2022-23.

Let’s briefly examine some of the gains under various US-administrations to India in the past 24-years.

Gains under Republican Administrations
George W. Bush (2001-2009): The Bush administration was instrumental in fostering a stronger U.S.-India partnership, particularly with the historic 2005 U.S.-India Civil Nuclear Agreement. This landmark deal allowed India access to civilian nuclear technology, facilitating its entry into the global nuclear order and strengthening energy security. This administration also championed India’s economic liberalization and growth by supporting bilateral trade, which saw a sharp increase, particularly in the services sector. By 2008, U.S.-India trade had grown substantially, with major American companies investing in Indian IT, manufacturing, and service industries, supporting job creation and technology transfer.

Donald Trump (2017-2021): President Trump’s administration emphasized defense and energy. U.S. arms sales to India increased as the two countries collaborated on securing the Indo-Pacific region. India benefited from energy partnerships, with an uptick in U.S. exports of liquefied natural gas and crude oil. Additionally, Trump's administration pushed for more balanced trade relations, which sometimes meant tariffs on Indian goods. However, the overall trade volume remained strong, with defense and energy cooperation acting as the cornerstones of the partnership.

Gains under Democratic Administrations
Bill Clinton (1993-2001): Although Clinton’s administration technically falls just outside the 24-year period, his visit to India in 2000 marked a major thaw in U.S.-India relations. His administration laid the groundwork for a stronger economic relationship, easing sanctions imposed after India’s nuclear tests and opening discussions that would lead to stronger economic and defense ties.

Barack Obama (2009-2017): The Obama administration’s approach was more holistic, covering trade, defense, climate change, and health. The U.S. recognized India as a "Major Defense Partner" in 2016, leading to joint military exercises and defense deals. Economically, Obama backed India's integration into the global economy and encouraged bilateral trade. India benefited from the “Pivot to Asia” strategy, aimed at balancing China’s influence, aligning the U.S. and India as strategic partners in the Indo-Pacific.

Joe Biden (2021-present): Under President Biden, U.S.-India relations have prioritized climate, technology, and regional stability. Biden’s climate policies align with India’s renewable energy goals, enabling India to access green technology and financial support. Bilateral tech cooperation has accelerated, especially in artificial intelligence and digital economy initiatives. India has benefited from the Biden administration's renewed focus on the Indo-Pacific, strengthening both defense partnerships and trade networks.

Economic and Strategic Takeaways
Across both Republican and Democratic administrations, India's economic gains have been substantial, though nuanced by policy focus. Republican-led administrations have tended to favor defense and direct investment, while Democratic administrations have adopted broader engagement strategies, emphasizing climate action, technology, and multilateralism. Both approaches have allowed India to secure economic benefits and strategic stability, underscoring the bipartisan value placed on U.S.-India relations over the past two decades.