Donald Trump won the 2024 presidential election. This victory signals a period of expected economic change. The changes will have both domestic and international effects. CareEdge Ratings has highlighted these potential impacts. His policy proposals across taxation, trade, foreign policy, immigration, and energy could impact the U.S. and India significantly.
- Tax Reforms – Trump’s tax agenda prioritizes stimulating economic growth by extending the 2017 Tax Cuts and Jobs Act (TCJA). He proposes reducing the corporate tax rate to 15% for domestic manufacturers. He also wants to eliminate the cap on state and local tax deductions. Additionally, he aims to remove taxes on Social Security benefits. Additional policies include capping credit card interest rates at 10% and allowing tax deductions for car loan interest payments. Although these measures aim to increase consumer spending, they carry potential inflationary risks. CareEdge warns that these reforms may exacerbate the fiscal deficit, currently at 6.3% of GDP, with national debt at 123%.
- Trade Tariffs – To support domestic industries, Trump plans to impose high tariffs on imports. This includes a 60% tariff on Chinese imports and up to 200% on vehicles manufactured in Mexico. These policies could strengthen U.S. job markets and make U.S. products more competitive domestically. However, they also risk disrupting global trade. India may benefit from supply chains shifting away from China, potentially boosting Indian exports. Nevertheless, CareEdge cautions that a slowdown in global trade could also negatively impact India.
- Foreign Policy and Defense – Trump has pledged to end prolonged international conflicts, such as the Russia-Ukraine war, although he has yet to provide detailed plans. His platform reinforces strong support for Israel and calls for NATO members to meet the defense spending target of 2% of GDP. These foreign policy shifts may impact global stability, indirectly affecting India’s strategic and economic interests.
- Immigration Policies – Trump’s stance on immigration includes stricter rules and penalties for visa overstays, which may impact India’s IT sector, reliant on U.S. work visas. By restricting immigration, Trump’s policies could limit access for skilled Indian professionals, potentially challenging India’s IT and tech industries that heavily depend on U.S. talent demand.
- Energy Strategy – Trump plans to increase fossil fuel production, remove restrictions on drilling, and reduce subsidies for green technologies. By expanding natural gas exports, his administration aims to lower energy prices. This policy could stabilize oil prices globally, benefiting India, which imports around 85% of its oil needs.
While CareEdge anticipates Trump’s policies may strengthen the U.S. dollar in the short term, a rising fiscal deficit could weaken it over time. For India, these policies present both challenges and opportunities, with potential gains from foreign investments and risks from possible disruptions in trade and currency stability.
