Win-win approach to US-India trade under Trump 2.0

Trump 2.0 meets Modi 3.0

With Donald Trump set to assume the US presidency in his 2.0 avatar, India under Modi 3.0 has a valuable opportunity to advance its strategic interests by adopting a more pragmatic approach to trade negotiations than in the past.

Such an opportunity may not come again soon. Even another Republican president might not be as favorably disposed toward India as Trump.

The right initiatives now will boost India’s chances of achieving Modi’s ‘Aazadi ka Amrit Kaal‘ goals for 2047.

To succeed, India should prioritize areas of long-term, high-value importance, such as technology access, defence cooperation, and workforce mobility, while remaining flexible on trade disputes, many of which are largely symbolic.

A well-crafted strategy that balances give-and-take will enable India to secure substantial benefits without sacrificing core interests.

Value-centric approach

The key principle is to secure what matters most to India, compromising on what matters more to the US but less to India.

This approach maximizes outcomes by identifying concessions on items that carry greater political or symbolic value for the US in exchange for those that have significant economic and political value for India but are still acceptable to the US.

While it may involve hard work, this effort is well worth it.

For example, high tariffs on Harley-Davidson motorcycles—symbolically significant to Trump—do not add much value for India. Conceding on this front may be tactically beneficial, allowing India to bargain for expanded access in sectors of higher priority, such as IT services, defence, electronics, pharmaceuticals, textiles, and opportunities for Indian human resources.

Similarly, offering concessions on select luxury goods or non-essential segments can serve as a goodwill gesture, enhancing India’s bargaining power without opening the floodgates to imports.

Strategic flexibility in key sectors

In agriculture, where US farm lobbies seek access, India faces a complex challenge due to the sector’s economic significance and political sensitivity. However, India can adopt a creative approach by selectively opening lower-stakes sub-sectors within agriculture, granting concessions without compromising domestic interests. Examples could include specific segments like high-quality nuts, fruits, and certain dairy products, subject to quotas or seasonal limitations.

In manufacturing, e-commerce, and digital sectors, India could follow a similar selective approach, negotiating limited relaxations on items less critical to India, with safeguards like data localization.

Resolving every issue may never be possible or even necessary. What matters is that India is seen as making its best effort toward a win-win outcome.

Supporting impacted sectors with targeted measures

To counterbalance the potential impact of these concessions, the government can implement targeted support measures:

• Agricultural Assistance: Should India grant selective agricultural concessions, the government could support affected farmers through subsidies, modernized infrastructure, or new market access initiatives to enhance competitiveness without hindering broader trade talks.
• Incentives for Small Industries: Small-scale manufacturers facing increased competition could benefit from tax relief, skill development, or technology grants, helping them adapt and thrive in a changing trade landscape.
• Skill Development Programs: In labor-intensive sectors like textiles, skill-building, and employment assistance programs can help workers transition to more resilient areas within the economy, preserving livelihoods and minimizing disruption.

These targeted measures would cushion affected sectors from the immediate impact of trade concessions while fostering long-term resilience and growth.

Ensuring gains outweigh support costs

By carefully selecting sectors for concession and negotiating reciprocal benefits, India can ensure that overall economic gains from trade deals exceed the costs of support packages.

For instance, limited access to certain agricultural products in exchange for expanded access to US tech or pharma markets could yield high-margin returns, offsetting any domestic support required.

This approach aligns with practices used by other major economies, such as the US, Japan, and China, which strategically support impacted industries as part of their trade negotiations.

Strengthening US-India relations through flexibility

Demonstrating flexibility in trade talks would position India as a cooperative and pragmatic partner, enhancing diplomatic goodwill and future leverage.

Trump has previously labeled India as a “Tariff King“—a reputation India can ill afford. Rather than maintaining a rigid, tough-negotiator stance that yields limited gains, a flexible, win-win approach can yield both immediate trade benefits and strengthen strategic alliances.

Trump also needs to show trade wins to his constituency, which aligns with India’s approach here.

Political benefits of support measures

Publicly acknowledging the challenges faced by affected sectors and implementing support measures could also be politically advantageous.

This approach shows the government’s commitment to inclusive growth, demonstrating that trade policies are fair and beneficial for all segments of society.

Such a stance could generate domestic goodwill, strengthen political support, and reinforce perceptions of equity in trade policy.

Conclusion: A pragmatic, win-win trade strategy

India’s best path forward in US trade negotiations under Trump 2.0 is a balanced, pragmatic strategy that aligns economic priorities with strong international relations.

By selectively conceding in low-impact areas and supporting affected domestic sectors, India can secure high-value benefits in priority areas, strengthen diplomatic ties with the US, and promote growth across domestic industries.

This approach positions India not only as a tough negotiator but as a flexible and responsible global partner, fostering economic success, building trust with key allies, and supporting sustainable growth at home.

Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

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