How will Donald Trump’s presidency impact India? Moody’s report gives clues

After his historic victory in the US presidential election, what Donald Trump’s second innings at the White House would mean for India and other Asian countries has been a centre of discussion. According to Moody’s ratings, New Delhi stands to gain significantly from this shift of power.

The ratings suggest that this development would be caused due to escalating US-China tensions and potential investment restrictions emerging in critical sectors.

“In the Asia-Pacific region, the world may witness a reallocation of trade and investment flows away from China due to heightened US scrutiny in strategic sectors. This shift will likely negatively impact China’s economy and dampen regional growth. Conversely, nations such as India and those in ASEAN could find new opportunities in this changing landscape,” the global rating agency said.

Moody’s anticipates a substantial pivot in US policy under the Trump administration, particularly regarding fiscal, trade, climate, and immigration issues, a departure from the Biden administration’s approach.

During his campaign, Trump signalled his intention to pursue tax reform by making the 2017 Tax Cuts and Jobs Act a permanent fixture, slashing corporate tax rates and providing income tax relief.

These initiatives, along with broad tariffs—including steep levies on Chinese imports—are likely to escalate federal deficits, creating a new dynamic.

Moody’s also predicts the potential for a protectionist trade policy under the Trump administration that could disrupt global supply chains and negatively impact sectors reliant on imported materials and goods, such as manufacturing, technology, and retail.

Moody’s on climate change policies under Donald Trump

Regarding climate policy, a reversal is anticipated as Trump advocates for increased fossil fuel production under the banner of “American energy dominance.”

This could lead to reduced funding for clean energy initiatives and a potential withdrawal from the Paris Agreement, undermining the country’s commitments to cutting greenhouse gas emissions.

“The shift would likely result in renewed support for the fossil fuel industry, reduced funding for clean energy and green technologies, and loosened environmental regulations, including the Environmental Protection Agency’s efforts to reduce emissions in the power and auto sectors,” the agency said.

“The Trump administration will likely withdraw from the Paris Agreement again and reverse commitments to meeting net-zero greenhouse gas emissions by 2050,” it added.