What Donald Trump's loss in the US midterm polls means for India trade deal

Given how unpredictable the US President is, no one is willing to hazard a guess on his modus operandi after what is almost unanimously being described as a "rebuke" from the voters

The victory of the Democrats in the US midterm polls does not necessarily add up to good tidings for India as the White House retains executive powers over foreign policy and trade talks.

Trump's early responses to the verdict indicate that he is inclined to brazen it out rather than accept the new reality. He does not see the verdict as a referendum on his administration and has made it clear that he retains the power to reject any legislation passed by the two chambers, posting an image of the red MAGA-style cap with the word "Veto" written in bold on it.

There is general consensus in the early analysis of the results coming out of the US that Trump is weakened but still holds a lot of executive power and can veto Democratic

bills.

Given how unpredictable he is, no one is willing to hazard a guess on his modus operandi after what is almost unanimously being described as a "rebuke" from the voters. Everyone appears to be bracing for impact and the apprehension is that he may try to become even more unilateral than he already is, particularly since the Democrats are itching for a fight.

While much of their agenda is domestic, the Democrats -- according to the Time magazine -- "see repealing the tariffs and ending the war as their two biggest opportunities to address the country's economic downturn", though how they can work around the President's executive powers to succeed is not clear.

Also, stricter congressional oversight is expected on the executive branches implementing Trump's rules on H1B visas.

Ahead of the polls, Thomas J. Duesteberg of the Washington-based think tank Hudson Institute wrote that in anticipation of an improved position in Congress, Democratic leaders had introduced bills to repeal several of the laws invoked by Trump, including the widely used Section 301 authority on "unfair trade practices", to justify his trade actions.

In late September, external affairs minister S. Jaishankar had identified Section 301 of the US Trade Act, 1974, which allows Washington to investigate foreign trade practices and impose retaliatory tariffs or restrictions, as the issue stalling the trade deal.

Till late in the evening, there was no official word from India on the US midterm poll results. Asked at the bi-weekly briefing how India viewed the polls and its impact on the bilateral relationship, external affairs ministry spokesperson Randhir Jaiswal said New Delhi would speak once the process was over, adding that elections were part and parcel of a democracy.

Outside official policy networks, opinion is divided on how the results will play out on the trade talks. India now has a chance to get a balanced trade deal with a weakened Trump, said Biswajit Dhar, a former JNU professor, adding that the President's reckless trade policies will be under check.

"India has to show political maturity and deal with the US on our terms. If we want a balanced trade deal, this is the time to do it," Dhar, also a trade economist, said.

Trump's indiscriminate use of tariffs to pressure countries like India will be under check from Congress, where Democrats have taken control, Dhar argued.

Ajay Srivastava, founder of the trade intelligence firm GTRI, however, said a midterm setback was unlikely to change America's protectionist trade direction. In fact, Trump may intensify pressure on India to secure a quick trade deal and demonstrate strength, Srivastava said.

He can also potentially act without Congress, relying on existing powers -- such as Section 232 and Section 301 -- and using executive orders, treasury sanctions and USTR rules to apply unilateral trade pressure.

"The adverse midterm results won't change President Donald Trump's trade direction because both Democrats and Republicans now favour economic nationalism, domestic manufacturing and strong supply chains," Srivastava said, adding that Democratic lawmakers also support protective tariffs for local union workers.

India and the US reached an understanding on February 6 and the two sides have been trying to clinch a trade deal ever since and get relations back on track after a fraying in ties last year. US officials have recently expressed optimism over a trade deal, saying an agreement was close to being finalised. Finance minister Nirmala Sitharaman, however, expressed doubt last month about the pact being finalised soon.

"We expect the uncertainties to continue in trade relations. We also think India's import of Russian oil will be a key monitorable given that Democrats are strongly opposed to offer Russian President Vladimir Putin a longer rope," said an industry observer.

Of the view that Trump's "unchecked presidency may linger", strategic thinker Brahma Chellaney said on X: "An opposition-controlled legislature wields the power of the purse, as Congress controls federal spending. Control of congressional committees will also allow Democrats to bring scandals involving Trump and his family into the spotlight through subpoenas and aggressive hearings.

"The President, however, enjoys vastly greater unilateral authority over foreign policy and trade than over domestic policy. Moreover, electoral repudiation and congressional opposition do not necessarily translate into effective restraints on presidential power in the US. A second-term President, with no further election to contest, may prove particularly difficult for Congress to rein in."