US voters have given Democrats control of the Senate and Congress in a rebuke to the administration of President Donald Trump. The outcome portends policy uncertainty and deadlock in Washington for the remaining half of Trump’s term.
For India, what comes next is a mixed bag, at best. The Trump administration’s outlook on many issues can be expected to remain unchanged, but some future legislation may be more accommodating of India’s interests, especially those related to immigration.
Uncertainty will continue to cloud matters related to trade and tariffs, given Trump’s penchant to be aggressive when on rough political terrain. Here’s a look at some of the key issues in India-US relations and how the outcome of the midterms could impact them.
Implications for the India-US trade deal
The US president can strike trade deals and offer some commitments to trading partners. Trump can be expected to take the executive order route for this.
However, powers to regulate as well as impose tariffs rest with Congress. If a trade deal with India that the two countries have been negotiating for months involves changes to US statutes, Congress will come into play.
The Trade Promotion Authority (TPA) was the traditional route for securing speedy congressional approval of trade pacts. The authorization of the TPA, which allowed Congress to frame negotiating objectives and expedite legislation, expired in 2021. The administration now lacks access to that fast-track process.
If the India-US trade pact were to move beyond tariff adjustments to commitments beyond what the administration can make, Congress will have to be brought on board. Depending on the fine print of a deal, that process could be time-consuming.
Trump could still use Russia sanctions law’s powers
The Sanctioning Russia and Iran Act gives the president sweeping powers to slap tariffs of up to 100% on countries that continue purchasing Russian crude oil or natural gas. That includes India, though Trump invoked the national interest to waive off the penalties for now.
He could still use the law as a bargaining tool to extract trade concessions from New Delhi, which continues to be one of the top buyers of Russian oil.
If the 100% tariffs are deployed, it would be a major blow to India’s exports.
The Democrats are broadly against a tariff regime. However, a Democratic-controlled Congress would also be inclined to push for more action against Russia as the Ukraine conflict drags on.
The Trump administration needs India’s refining capacity to reduce fuel prices, which was clearly stated by Secretary of State Marco Rubio recently. It simultaneously wants India to buy more Venezuelan oil, which the US now controls. The administration’s aim is to wean India away from Russian oil, a policy that resonates with the Democrats.
“It is imperative that the legislative and executive branches work together to create tools to exact a heavy price on those who buy Russian oil and natural gas,” Democratic Senators Jeanne Shaheen and Richard Blumenthal said in a bipartisan statement.
That would be bad news for New Delhi.
However, Indian conglomerate Reliance is making investments in a $300 billion greenfield refinery in Texas, which would be the first American refinery in 30 years. Any accommodation on Russian oil purchases could hinge on this factor ultimately more than the politics.
How India would face up to Trump’s pressure
A politically weakened Trump is could resort to bullying tactics to get his way. This means he may ramp up pressure on India to reach a trade deal without offering too many concessions. India, however, is not likely to budge.
Earlier this year, Bloomberg reported that India privately conveyed to the US that it would be willing to wait out Trump’s term rather than sign a trade deal not to its liking.
New Delhi denied the report, but its trade minister said the interests of Indian farmers will not be compromised.
The expectation that other nations will also not give in to Trump’s pressure may be part of New Delhi’s calculus.
However, the pressure to keep Trump happy is growing less by the day for Prime Minister Narendra Modi’s government. India has embarked on a drive to dilute its dependence on the US market by striking trade pacts with the EU, the UK, and New Zealand. It is also in talks with as many as three dozen countries to forge trade deals.
Background friction will continue on the diplomatic front
A Democratic-controlled Congress is seen as offering more clarity on the direction of US foreign policy vis-à-vis India, and acting as a countervailing influence to the unpredictability of the administration. Democrats also see India as a counterweight to China, and believe that New Delhi can play a larger role in the Indo-Pacific region.
The Trump administration, in contrast, does not consider India an indispensable pillar in the president’s core Indo-Pacific vision. It has apprehensions on China, but considers the country a systemic rival that cannot be ignored.
US policymakers are also wary of letting another country in Asia emerge as a potential challenger to Washington’s military and technological prowess – mainly due to China’s achievements on these counts. “India should understand that we are not going to make the same mistakes that we made with China 20 years ago,’” Deputy Secretary of State Christopher Landau said in March.
Since deal-making is a vital cog in Trump’s political philosophy, the US will continue to mount pressure on India to accede to its demands.
No immediate breather on immigration and visas
The midterm election results could have a significant bearing on US immigration policies. It would certainly impact future legislation tied to the H-1B visa program, though immediate changes to visa rules are unlikely.
Democrats back expanding employment- and family-based immigration but are also not in favor of the outsourcing practices of US businesses.
Congressional scrutiny of tough immigration rules championed by Trump would increase, but a reversal of the presidential proclamations that impact India, including the $100,000 fee for new H-1B visa applications, is unlikely.
The fee has been struck down by the lower courts, but the administration is most likely to drag it to the Supreme Court.
Defense ties will remain unaffected
Indo-US defense ties are not likely to be significantly impacted by the changing power equations in Washington. New Delhi and Washington signed a 10-year defense pact last year, and that is set to stay the course.
India and the US have shared concerns about China. “There is bipartisan agreement that a strong defense partnership with India is vital for its Indo-Pacific strategy and containing China,” Manjari Chatterjee Miller, a senior fellow at the US-based Council on Foreign Relations, wrote last year.
Washington also wants India as a QUAD partner. So strategic convergence, critical technologies, information sharing, and joint production of military hardware will continue to advance between the two nations.
Quick end to Middle East conflict would benefit India
Uncertainty looms over the Trump administration’s plans for the Middle East. A Democratic-controlled Congress may not necessarily be a bulwark against Trump’s Middle East policies, which have resulted in a spike in oil prices.
Still, the administration’s move to cut $4 billion in annual aid to Israel – announced on election day – may help control the latter’s penchant to draw the US into conflicts in the region.
If the Middle East crisis peters out, India would be a major beneficiary, as it sources its energy needs from the region. Lower oil prices would lessen India’s dollar requirements, shore up the rupee, and cool inflationary pressures in the South Asian nation.
Trump, term-limited and having lost Congress, has little need to please US voters. And he still wields vast presidential powers. How these powers are put to use can impact vast swathes of the globe diplomatically, economically, and militarily.
A presidential veto, which Trump has indicated he will resort to frequently, can be overridden only if two-thirds of members in both chambers vote against it. That is a tough ask given the deep support Trump commands among the remaining Republican lawmakers.
At this stage, India appears likely to stick to a longer-term approach.