India-US trade deal: What midterm elections mean for trade policy, tariff and export sectors? Experts explain

Experts said that the US midterm election results will not rewrite US trade policy overnight.

As India and the US work to finalise a long-awaited trade deal, the ruling Republicans' major electoral loss in the recently concluded US midterm polls has raised crucial questions: How may this flip in the US Congress affect the India-US negotiations? Will the setback to US President Donald Trump's party give India room to negotiate?

Experts believe that the Republican Party's stinging loss in the midterm elections, which shifted the balance of power in the US Congress, may push Trump to accelerate negotiations that had been reportedly stalled over tariff concerns. This, however, may not make the "US trade policy less restrictive," they said.

Another expert explained why India may get some room to negotiate on "substance rather than under deadline pressure."

This is because "the Section 301 and Section 232 duties [under which tariffs were imposed] rest on executive authority and any rollback faces a presidential veto," he said.

He believed that a Democratic Congress with oversight powers "makes abrupt tariff escalation politically harder, which gives India room to negotiate on substance rather than under deadline pressure."

"Labour-intensive exporters in textiles, apparel, and gems and jewellery stand to gain most from that stability," he said.

'India must keep diversifying'

On India's strategy, Kaushik said New Delhi must "secure a predictable, rules-based tariff schedule rather than chase short-term concessions, and to broaden engagement beyond the White House to Congress and US states."

"At the same time, India must keep diversifying through the EU agreement and other partners, so the US remains a key market but not a single point of vulnerability. On agriculture and dairy, India should hold firm, as US farm-lobby pressure cuts across party lines," he added.

Trump 'may push for early India-US trade deal'

Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI), said on Friday that "bad" midterm election results could push Trump to focus more on trade negotiations and fast-track the proposed agreement with India.

"I think the bad election results for Mr Trump will nudge him to expedite trade relations with India, and he may be expediting that trade agreement. It may happen sooner than we think," he told ANI.

According to Srivastava, with Trump facing domestic political constraints, he may seek an early trade agreement with India to demonstrate his influence on the international front.

"With Trump weakened in the domestic field, he will have only trade to concentrate and I think he will push for an early India-US trade deal," he said.

Midterm results won't 'make US trade policy less restrictive'

While Trump's domestic political setback may accelerate efforts to conclude an India-US trade agreement, the Global Trade Research Initiative (GTRI) expects Washington's broader protectionist trade approach to remain largely unchanged.

The GTRI, in its latest report, cautioned that the midterm setback would not necessarily make US trade policy less restrictive.

Srivastava indicated that the threat of additional US tariffs linked to India's purchases of Russian crude oil could remain a negotiating tool for Washington.

He told ANI that the US could use this threat to encourage India to sign the proposed trade agreement, potentially imposing additional tariffs of around 17-19 per cent rather than the much higher level previously discussed.

Srivastava claimed that senior officials and ministers from both countries had been engaged in discussions and that negotiations were close to completion, although some differences remained.

He said the proposed Graham Act had earlier led to expectations that the US administration would take around 60 days to decide on the matter. With some of that period already elapsed, he expects the trade agreement to be concluded within approximately two months.

India-US trade deal talks: Why were they stalled, what's at stake

India and the US had agreed to a framework for the deal in February, which brought down to 18 per cent from 50 per cent the punitive tariff on most Indian goods imposed in August last year.

In the meantime, the US Supreme Court invalidated Trump's use of emergency powers to impose sweeping tariffs globally, leading to a 10 percent baseline rate. But a final deal between two of the world's biggest economies remains elusive.

In recent months, the India-US talks have faced complications, most recently a new US law that paves the way for up to 100 percent tariffs on Indian goods due to New Delhi's purchase of Russian oil.

A deal has also been held back because Washington is yet to complete a Section 301 trade investigation on several nations over alleged excess industrial capacity, Reuters reported on October 6.

The probe is to evaluate whether such overproduction is hurting or undercutting American industries. Unless this probe is completed, it is hard to tell what final tariff Indian goods will attract, the report added.

What do India, US want? India has sought to keep dairy, poultry, rice, wheat and other farm products outside the scope of market-opening commitments. It wants greater certainty over US tariffs before making concessions.

The Trump administration wants India ⁠to cut Russian oil purchases, arguing Indian purchases of Russian crude help finance the war in Ukraine.

What's at stake: The US is India's largest export market. Analysts told Reuters earlier that in the absence of a trade deal, India risks higher US tariffs from the ongoing trade probe and purchase of Russian oil, even if it could negotiate for waivers under the sanctions law.

Another increase in tariffs could hurt businesses, dent market sentiment and hurt the Indian currency, ⁠which is already trading close to record lows.

For 2025, India's total goods exports to the US reached $103.82 billion, while US exports to India totalled approximately $45.6 billion, for a total bilateral trade of $149.42 billion, according to ANI.

The bilateral services trade in 2025 was recorded at $92.23 billion, where India exported $48.67 billion worth of services to the US and imported $43.56 billion worth of services from the US.

US midterm election results 2026

Democrats have officially won full control of both chambers of the US Congress in the November 3, midterm elections. This historic shift ends the Republican Party's unified control in Washington, delivering a major political setback to President Donald Trump midway through his term.

Democrats last won a majority in the Senate in 2022, before Republicans went on to win control of the chamber in 2024.

The victory will have implications for control of Washington, as Trump enters his final two years in office.

With the majority, Democrats can block the president's nominees and control what measures receive votes on the floor, severely limiting his ability to get anything done legislatively.