Trump 2.0: Trade, Immigration, Manufacturing, and Geopolitical Complexities

In 2016, Trump won the Electoral College but lost the popular vote. In 2020, he lost both, and now triumphantly, with a mandate so powerful, Trump swept both the Electoral College and the popular vote as Republicans secured the Senate and the House of Representatives as well, making this a clean sweep.

Trump ran a robust and well-executed campaign across seven key swing states hammering core issues on immigration, the economy with regards to inflation, and bringing back jobs in America under the credo of Make America Great Again.

Immigration

Immigration was a cornerstone of Trump’s first term, and it would undoubtedly remain central as he returns to the Oval Office. During his first term between 2017-2021, Donald Trump centered his campaign on “build the wall”, while this time, he touched on 16 million undocumented immigrants in the country and blamed the Biden-Harris campaign for what he described as dereliction of securing the southern border.

For Trump, managing immigration—both legal and illegal—will be a complex, costly, and politically charged challenge. A Trump administration will likely continue policies aimed at curbing illegal immigration, but the issue is intertwined with legal immigration concerns.

H-1B visas have been the central focus for the Indian tech and white-collar workers in the United States, especially in the STEM line of work. STEM graduates are crucial for U.S. industries, particularly since a skilled workforce is needed to meet demands in technology and innovation and high-end manufacturing, particularly chip design. Approximately 70% of H-1Bs are granted to Indian citizens.

For decades, the technology industry has provided the U.S. with a global competitive edge, and Silicon Valley continues to epitomize that hub for innovation. The Indian tech worker plays a vital part in the United States’ tech economy, as the brightest minds seek American institutions for cutting-edge STEM education and then go on to build robust tech start-ups hence the very economic and innovative strength of Silicon Valley is tied to the Indian tech worker.

However, Trump’s position on limiting immigration means there could be challenges for the H-1B worker. Unless illegal immigration is addressed effectively, the Trump administration may find it difficult to balance public sentiment with the economic need for a skilled workforce. His administration will have to navigate a delicate balance between tightening borders and ensuring that the U.S. workforce remains globally competitive, especially as China seeks to close the economic gap.

Jobs, economy and inflation

Trump’s primary message to his base during the campaign was that the economy would continue to face major headwinds, and inflation would continue to weigh on American households. Inflation was the number one issue for several voters, especially blue-collar workers, who were a crucial part of Trump’s base in 2016, 2020, and now in 2024. Job creation, particularly in manufacturing and skilled labor, will be critical. However, rising inflation and the lingering impacts of the COVID-19 pandemic mean that blue-collar America will expect Trump to deliver on his promises to revitalize jobs and lower the cost of living.

Trump’s economic strategy might include a continuation of tariffs and a push to re-shore manufacturing jobs. The goal would be to stimulate the economy, but tariffs—especially a proposed 20% on imported goods from most countries—could lead to bumps in trade relationships, particularly with China, where Trump has proposed tariffs as high as 60%. American companies will likely adopt a “China-plus-one” strategy, where they maintain access to the Chinese market while diversifying operations to other countries like India.

This strategy aligns with the example set by Apple, whose multiple vendors have invested nearly $5 billion in manufacturing across the states of Tamil Nadu and Karnataka. This has led the tech giant to reportedly assemble $14 billion worth of iPhones in India in 2024 – double the previous year’s production.

Trump will need to ensure that the U.S. economy continues to attract high-skilled manufacturing talent to support these shifts, addressing both workforce training and immigration policy.

Geopolitical tensions

The global stage has become more volatile since Trump left office, and a second term would likely see him grappling with heightened tensions in Eastern Europe with the war in Ukraine nearing its third year, the full-blown conflict in the Middle East that has spread beyond Israel’s borders to Lebanon and direct conflict with Iran, and the Indo-Pacific theatre as China flexes its maritime muscles.

Relations with Beijing continue to remain fraught. In Trump’s first term, he secured a commitment from China to purchase $200 billion in US goods — a commitment that fell short. Under Trump 2.0, we could expect a renewed focus on pressuring China to uphold its promises or face steep tariffs, as high as 60%. Such measures could further stress an already tense U.S.-China relationship.

China’s ambitions in the Asia-Pacific and its goal of becoming a dominant global power would only intensify these stress points. This accentuates the role of the Quad in the Indo-Pacific as President Trump would likely continue to build on the progress that the Quad made under President Biden.

The Quad is a formidable nearly $35 trillion coalition of four democracies – US, India, Japan, and Australia, that is reshaping the economic landscape in the region. The economic vision of the Quad presents itself as a beacon of stability, prosperity, and innovation. Along with Australia, and Japan, the United States, and India share a vision of a free and open Indo-Pacific.

The United States has treaty alliances and trade deals in place with Japan and Australia, while India has a robust trade agreement with Japan and a framework in place with Australia. Through the Trade Policy Forum (TPF), both Washington and New Delhi have made progress on outstanding trade issues. The Quad can serve as a vital framework instead of bilateral trade deals to bolster economic engagement between the four democracies.

The geo-economic component

With its growing industrial capabilities, India could serve as an alternative supply chain base for American companies, allowing them to reduce their reliance on China. This pivot also aligns with India’s interests as it seeks to establish itself as a manufacturing hub and build on resilient supply chains.

Elon Musk played a vital role in Trump’s return to the White House, both publicly endorsing him and contributing heavily to the campaign. Musk is expected to be a prominent business voice and expected to have a significant influence in the new Trump administration. Musk has indicated that he is keen to bring Starlink Tesla to the country.

Tesla in India, would not just boost e-mobility and work for India’s climate goals, but be a vital factor in India’s chip manufacturing capabilities, that autonomous vehicles rely on.

With over 1,700 Global Capability Centers in India supporting American companies and 50% of Qualcomm’s intellectual property being generated there, India has established itself as an invaluable partner in research and development. Major defence companies like Boeing, Lockheed, and RTX are also expanding their manufacturing presence in India, enhancing US-India defence cooperation and bolstering India’s indigenous defence manufacturing capabilities.

The Russia factor

India’s dependence on Russia for defence has been gradually diminishing as US-India defence cooperation grows in an area where the two are aligned on the intersection of critical technology and defence. Trade between the two countries is at $ 200 billion, dwarfing India’s economic ties with Russia.

However, India continuing to import oil from Russia remains a sore point for the U.S. However, Washington understands, that India is a net energy importer and now the world’s most populous country, and to meet the needs of its 1.4 billion citizens. The incoming Trump administration would likely support policies that bolster India’s energy independence and align the two countries on shared security interests, although Trump’s withdrawal from the Paris Accords reveals that he won’t be as supportive of clean energy.

As tensions with Beijing escalate, the US-India relationship will continue to play a vital role in regional stability. From security to technology, economic ties, and people-to-people connections, the strategic partnership between Washington and New Delhi remains politically agnostic and robust.

The US and India are more and more aligned geopolitically and Prime Minister Modi shares a convivial rapport with President Trump and will likely pick up from where they left off in 2021. President Trump too has called Prime Minister Modi “his friend” and Prime Minister Modi was one of the first three phone calls that the President-elect made to world leaders.

As Trump comes back to power, the vision will be to build on the progress made during his previous term and the Biden administration, cementing India as a cornerstone of America’s Indo-Pacific strategy. Trump’s 100-day challenge includes tackling inflation and manufacturing demands, which would require a balance between tariffs, job creation, and immigration reform and the problems on the border.

On the world stage, the twin conflicts in Ukraine and the Middle East will continue to drain resources, and President Trump has not shied away from cutting funding support and prioritising investments at home.

Trump would also need to handle increasingly assertive moves by China, support partners like India, and manage trade tensions with pragmatism. The U.S.-India relationship, poised for growth, will be essential for both countries to meet their strategic goals in an uncertain world.

Trump has taken an assertive approach in the past, but a Trump 2.0 will need to temper an assertive approach with the delicate intricacies of pragmatic fiscal and prudent foreign policy.

Mukesh Aghi is the President and CEO of the US-India Strategic Partnership Forum (USISPF).