A note for New Delhi on dealing with ‘Trumperica’ Premium

Under Trump 2.0, a detailed analysis over the issues that will most affect India, with the duopoly of immigration and taxes at the forefront, is necessary

With a flourish of his pen, United States President Donald Trump waded through dozens of files within hours of being sworn in, with executive orders (EOs), revocation orders of Biden-era decisions, campaign commitments to the ‘Make America Great Again’ (MAGA) base and exit orders from a number of multilateral agreements and organisations. The decisions, which the White House referred to as ‘100s of Executive actions in the first 100 hours to kick off America’s Golden Age’, will, no doubt, have lasting implications for the U.S and for the world. For India — that has seen a year-on-year improvement in ties with the U.S. for the past quarter-century — the visible signs from the Trump administration have been positive, given India’s External Affairs Minister S. Jaishankar’s visit to the Trump inauguration, the meeting of the Quad Foreign Ministers and the bilateral with his counterpart Marco Rubio — which was Mr. Rubio, the new U.S. Secretary of State’s first — followed by the Trump-Modi call. On closer analysis of the economic impact, however, these optics may be deceptive. As New Delhi prepares for a visit by Prime Minister Narendra Modi to Washington, and Mr. Trump’s visit to India later this year, a detailed analysis over the issues that will most affect India, with the duopoly of immigration and taxes at the forefront, is necessary.

On immigration, Mr. Trump’s specific orders on securing borders, guarding against “invasions” by illegal aliens, designating cartels as foreign terrorist organisations and advanced vetting of the visa issuance process on the one hand, as well as raids and arrests by the Immigration and Customs Enforcement (ICE) agency on the other make it clear that this is a major priority. While New Delhi has reacted to these measures with sanguine statements on taking back all illegal immigrants who are verifiably Indian, it would be short-sighted not to see the deeper, three-pronged economic effect on India.

Indians are now the second largest group of citizens being granted U.S. citizenship legally (after Mexico) and have cornered a predominant share of H-1B visas; but they are also the third largest in terms of illegal entry. Mr. Trump’s actions will affect not just thousands of Indians who undertake perilous journeys by air and sea, and then by foot over South and Central America and Canada to the U.S.’s land borders, but also those currently in the U.S. A Pew Research analysis of ICE numbers says 7.25 lakh Indians are amongst about 14 million in the total undocumented migrants, with more than 18,000 Indians in detention centres on a “final removal list” for deportation.

First, if the Trump administration does escalate deportation flights — as it did in its first term — over the next four years, India will have to deal with the loss of remittances and provide for the returnees, adding to the unemployment crisis in India.

Second, as Mr. Trump has shown by successfully strong-arming Colombia into accepting deportations without conditions, or face the imposition of 25% tariffs instead, any refusal to do so would also incur economic costs.

Third, these migrant numbers refer largely to blue-collar workers, but other measures by Mr. Trump are also aimed at the white-collar, middle-level managers, engineers and other professionals. Mr. Trump’s EO to end citizenship birth rights may be struck down by the judiciary, but the message from the move, that follows restrictions on H-1B spousal work privileges in his first term, is clear — the welcome mat for those seeking to move permanently and raise families in the U.S. is being removed. This will require a reassessment of India’s own education and skilling policies to ensure that all the science, technology, engineering and mathematics (STEM) graduates who would be impacted can be absorbed.

If the impact of immigration actions takes some imagination, the result of Mr. Trump’s trade policy plans needs none whatsoever, going by his pronouncements and the harsh punitive measures he undertook in his first term. On inauguration day, Mr. Trump’s EOs and Exit Orders included an “America First Trade Policy” and a directive to Mr. Rubio to implement an “America First Foreign Policy”. India must be prepared for how it will respond to the U.S.’s weaponisation of tariffs as a means to enforce Trumpian diktats. During Trump 1.0, New Delhi quietly accepted the withdrawal of its Generalized System of Preferences (GSP) status, and Mr. Trump’s order to end all oil imports from Iran and Venezuela. In Trump 2.0, such actions might not only enable the U.S.’s bully-tactics further, but it may also incentivise others such as China to follow suit.