US Midterm Shift: Why India Should Temper Expectations for a Trade Breakthrough
NEW DELHI – The outcome of the US midterm elections, which has handed control of both the Senate and the House of Representatives to the Democratic Party, is being closely watched in South Block. However, while the political landscape in Washington has shifted, Indian policymakers are warning against the assumption that this will lead to an immediate thawing of trade relations or a sudden pivot away from the economic nationalism that has defined the Trump presidency.
While a Democratic-led Congress may introduce new political friction, experts argue that the structural foundations of US trade policy are unlikely to undergo a radical transformation.
The Illusion of Policy Reversal
For India, the primary areas of concern remain the stalled bilateral trade agreement, the volatility surrounding the Iran conflict, and the broader stability of global energy markets. Though many anticipated that a shift in power might provide relief from protectionist duties, analysts suggest that the “America First” agenda is deeply entrenched.
“The era of US protectionism is far from over,” notes Pinak R. Chakravarty, former Secretary (Economic Relations) in the Ministry of External Affairs. He explains that while Democrats may view India as a necessary strategic partner against China, the executive branch retains significant leverage over trade, often operating independently of legislative shifts.
Rupa Dutta, a Distinguished Fellow at the Chintan Research Foundation, echoes this sentiment. She emphasizes that trade tensions are largely driven by domestic protectionist mandates that transcend partisan politics. Consequently, while a deal remains a high priority, its timeline will likely remain subject to political expediency rather than a newfound spirit of international cooperation.
Congressional Scrutiny vs. Legislative Power
The arrival of a Democratic majority in Congress will undoubtedly increase the frequency of hearings and investigations into the Trump administration’s tariff strategies. Lawmakers are expected to demand greater transparency regarding how these duties impact American consumers and businesses. However, the ability of Congress to force a reversal is limited.
President Trump holds considerable constitutional authority over trade, and his veto power acts as a significant roadblock to any legislative attempt to dismantle his existing tariff framework. As government officials involved in recent negotiations have noted, the Democrats will have more power to “investigate and challenge” than to “dictate an alternative policy.” This bureaucratic gridlock suggests that for Indian exporters, the prospect of a swift breakthrough remains remote.
Economic Headwinds and the Energy Crisis
The uncertainty surrounding US policy is translating into tangible costs for the Indian private sector. Saibal Ghosh, CEO of a Delhi-based engineering export firm, points out that the lack of predictable access to the American market is hampering long-term investment and production planning.
The geopolitical front adds another layer of complexity. With the US elections concluded, there is apprehension that the administration may take a more aggressive stance toward Iran to solidify its foreign policy footprint. Given that roughly half of India’s crude oil and nearly 90% of its liquefied petroleum gas imports transit through the Strait of Hormuz, any escalation in the Persian Gulf-Red Sea region would have immediate, detrimental effects on India’s energy security.
These external pressures—combined with the persistence of high tariffs—are expected to strain margins and dampen business sentiment. This macro-economic environment has already weighed heavily on the Indian rupee, which has depreciated from approximately 88.57 against the dollar a year ago to 94.87 today. Bank of Baroda analysts project that the currency will continue to face volatility, likely hovering between 94.75 and 95.75 in the near term, reflecting the persistent caution of global markets regarding the ongoing US-India economic impasse.
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