By : Purvi Agarwal

Abstract

This article is set to provide and substantiate a perspective on the America First Policy following the swearing-in of Donald Trump as the President of the United States of America. The United States has withdrawn from many multilateral organisations and agreements, thereby causing a lot of unease and instability in international trade and global supply chains. The economic nationalism and isolationism inherent in this rhetoric has both challenges and opportunities at stake for India, considering the diaspora and trade America holds with it and India’s regional position in the Indo-Pacific and the Global South. India will need to navigate these dynamics carefully to protect its economic interests and maintain its position in the global landscape. Both countries must recognise the importance of maintaining a strong and cooperative relationship to ensure mutual prosperity and stability in an increasingly interconnected world.

Introduction

Following his victory in the November 2024 election, Donald J. Trump was inaugurated as the 47th President of the United States, initiating significant discussions surrounding a potential crisis of trust in America and promising to bring complete restoration of America and the revolution of common sense. He committed to building upon his previous successes, unleashing the American economy, and providing all Americans, the opportunity to pursue their versions of the American dream, underscoring a renewed commitment to nationalist economic policies under the banner of “America First. In addition to this, he declared an emergency at the southern border, not only reinstating the ‘Remain in Mexico’ policy and ending “the practice of catch and release,” but also returning millions and millions of criminal aliens to the places of their origin. More importantly, the Alien Enemies Act of 1798 was invoked, allowing the President to manage or limit the activities of individuals from hostile nations during times of war or threats of invasion. Part of the economic policy he pushes, Trump attributes record-high inflation to massive overspending and rising energy prices; he emphasises that high energy costs devastate American consumers by driving up the cost of transportation, heating, farming and manufacturing, therefore declaring a national energy emergency “to insulate itself from hostile foreign actors”.  

America First Policy, Trade Wars and Global Instability

Donald Trump has openly critiqued the efficiency of previous governments in matters dealing with both foreign and domestic affairs, such as foreign aid, defence ties, trade, immigration and energy policies. Throughout his previous term from 2017 to 2021, Trump’s narrative has been grievance-orientated, creating a sense of crisis and bringing about a strong sense of nationalism and protectionism. During his election campaign in October 2024, he said, “To me, the most beautiful word in the dictionary is ‘tariff’”. Following his assumption of office, there was an imposition of a 25% tariff on most imports from Canada and Mexico, a 10% tariff on Canadian energy products and a 20% tariff on Chinese imports, increased from an earlier 10% out of which the levy on Canada and Mexico was reversed both within a mere six weeks. Predictably, Trump’s efforts to penalise countries distancing themselves from the U.S. dollar, has not only created international distress and market instability, but also inadvertently accelerated global de-dollarisation initiatives. Major economies, such as China, Russia, and various European nations, are increasingly adopting alternative currencies for trade. The growing prominence of the Chinese yuan in international transactions, the rise of central bank digital currencies (CBDCs), and the establishment of a BRICS-led payment system collectively signify a shift away from U.S. dollar dominance.

One might be inclined to assume that the adoption of isolationist, anti-immigrant, and “self-reliance” policies could signal the decline of the United States’ global influence. As various actors have historically emerged and withdrawn within the international system, the U.S. has historically and enduringly played a significant role in cultural diplomacy, soft power, and hard power, as well as in multilateral organisations. However, disengaging from its inherent responsibilities as a “world leader” and a repositioning in its foreign policy priorities may lead to a reduced reliance on Washington by foreign governments, international and non-governmental organisations, private stakeholders and civil society. In other words, a focus on “America First” could lead to strained relations with allies, reducing cooperation on global issues such as climate change, terrorism, and economic stability. Washington has already begun pulling back from the World Health Organisation, the Paris Agreement, the Loss and Damage Fund, the Just Energy Transition Partnership (JETP) and many other deals. This further exasperates bilateral ties and mutual trust among nations. Moreover, uncertainty surrounding trade wars has resulted in increased instability in equity markets; in 2017, there were waves of shock that rippled through the stock market with no expectations of such a level of fluctuation. Trade barriers have also significantly impacted commodity markets, particularly those of energy, metals and agriculture. Interestingly, other than a revision of the world order, global instability and disruption of supply chains, Washington may even face significant challenges in its domestic economy.

Trump 2.0, America First and India’s Dilemma 

The United States is India’s largest trading partner, with total bilateral trade in goods and services reaching $190.1 billion for the calendar year 2023. During the fiscal year 2023-24, the U.S. ranked as the third-largest source of foreign direct investment (FDI) in India, contributing USD 4.99 billion, accounting for nearly 9% of India’s total FDI equity inflows. The 2 countries also interact through several agreements and platforms such as the India-US Trade Policy Forum (TPF) and the Commercial Dialogue to foster the growing trade relationship. Further, in 2023, India exported approximately $36.3 billion in services, mainly in IT and professional sectors, which are essential to the U.S. economy. On an official visit for the India – USA Joint Press Conference on February, 13th, 2025, Prime Minister Narendra Modi compared the Make America Great Again (MAGA) policy with “Viksit Bharat 2047,” even comparing it with India’s development through the acronym “MIGA,” forming a “MEGA” partnership for prosperity and the mega spirit giving new scale and scope to common goals. Later, his official Instagram handle featured a series of stills of him and Trump firmly holding hands and even hugging, emphasising the same in the caption. While the MAGA policy has been widely criticised and termed problematic by many, India may have chosen to put its national interest first as part of its broader foreign policy of strategic clarity and the confidence to act on it. This comes closely following the “Immigration Crackdown” of the White House and the deportation of 332 Indians as of March 7, 2025, there have been several criticisms of the government’s silence on the mistreatment of those individuals. In addition to the 18,000 Indians living in the US with illegal status, about 4.4 million persons of Indian American/Indian origin reside in the country as one of the most successful communities and excel in various fields. Understandably, both nations share a mutually beneficial relationship driven by economic exchange and bilateral affinity. 

However, Trump’s policies risk hampering this symbiosis, generating significant uncertainty for Indian immigrants in the U.S., particularly H-4 visa holders who age out of dependent status at 21. Approximately 134,000 Indian children are at risk of losing their dependent visa status, prompting some families to consider self-deportation or migration to countries with more flexible immigration policies, such as Canada or the UK. Additionally, the challenges for immigrants are compounded by the blocked work permits under the Deferred Action for Childhood Arrivals (DACA) program and ongoing controversies surrounding H-1B visas. For fiscal year 2026-27, H-1B visa registrations have been announced, with a cap of 65,000 visas and an additional 20,000 reserved for master’s degree holders. This could lead to missed opportunities for growth and expansion, particularly in sectors like technology, pharmaceuticals, and consumer goods due to loss of market access, Investment Opportunities, export revenue, and FDI access to technology and Remittances.

In the evolving landscape of U.S. trade policy under Trump 2.0, India stands apart from countries like Mexico, China, and Canada, having been subjected to broad-based tariffs rather than targeted, sector-specific ones. While these blanket measures may seem less aggressive, they still reflect Washington’s larger effort to protect its manufacturing sector and reduce dependence on imports—particularly in areas where China has long held dominance. Regardless, the U.S.’ endeavour to protect its manufacturing sector and reduce reliance on imports, particularly in their key sectors, where China has historically played a pivotal role, has mixed consequences for New Delhi.With Chinese goods proving more expensive, some companies might consider India as an alternative manufacturing hub. On the other hand, the U.S. push for energy independence—especially if it leads to higher tariffs on oil and gas imports from key suppliers like Canada and Mexico—could strain global energy markets and indirectly impact India by making energy imports more expensive or less accessible  This is just one area in which the Sino-US relationship has experienced intense economic and trade tensions, driven by issues such as trade imbalances, intellectual property disputes, and market access barriers. While neither Beijing nor Washington can afford to escalate the ongoing trade war, the tariffs and retaliatory measures offer no added tangible benefit. It would be natural to anticipate increased friction regionally, particularly for India, Japan, and South Korea, with the G20 or WTO as the potential balancing actors. The “Wolf Warrior Diplomacy of Beijing,”may even compel Washington to adopt a more confrontational stance, particularly in the South and East China Sea, the Indo-Pacific and most importantly, the Global South. Issues concerning the Global South, including climate justice, reparations, and the proposed $100 billion in technology transfers, wield significant influence and as a result, the Global South countries may be compelled to pursue self-sufficiency. Moreover, within this context, China could become a primary target with India left navigating complexities at the crossroads.

Final remarks: a strained US-India relationship or a path to economic boost?

While “America First” may offer short-term gains for the United States, the broader global repercussions could prove more complex; emphasising American manufacturing and energy independence may indeed create jobs, but a simultaneous lack of skilled workers could lead to economic instability. For India, the strategic landscape presents both risks and opportunities. On the one hand, the promise of doubling bilateral trade to $500 billion by 2030 could generate jobs, invigorate industries, and drive economic growth. However, New Delhi must tread carefully, balancing optimism with caution in the face of Trump’s unpredictable “on again” and “off again” policies. Looking ahead, India’s strategically autonomous approach and the “Viksit Bharat” initiative could lead to prudent diversification of trade partnerships and a reinforced focus on self-reliance. Whether this era of Trump 2.0 will strain Indo-US ties or pave the way for economic prosperity depends largely on how effectively India navigates this intricate geopolitical and economic terrain.

About the Author 

Purvi Agarwal is pursuing a B.A. (HONS) in Diplomacy and Foreign Policy at the Jindal School of International Affairs, O.P. Jindal Global University and is a columnist for the Centre for New Economic Studies. She is as a research associate at the Centre for Analytical Research and Engagement, Research Assistant for the Jindal Global Centre for G20 Studies and Research Intern for the Centre for Northeast Asian Studies. Previously, she served as the Centre Coordinator for the Centre of European Studies under the Jean Monnet Chair as part of the Radar Project. Her previous experiences include ABP Network, NDTV, the Europe India Centre for Business and Industry, and SRF. Purvi is proficient in Hindi and English and holds certifications in German and Japanese.

Image Source : @narednramodi on instagram.