Can India win from possible Trump’s US and Xi Jinping’s China tussle?

With the world preparing itself for drastic changes in the policies of the United States after Donald Trump takes charge as the President, India and ASEAN countries might emerge as possible winners as the nation may shift from China for investment and trade, Moody's Ratings said in a recent report on Friday.

The November 5 election of Trump as the next US President will likely materially shift its policies from those of the current Joe Biden administration.

Moody's said in the Asia-Pacific region, trade and investment flows might be further diverted away from China as the US tightens investments in strategic sectors, which would negatively affect China's economy and consequently dampen regional growth.


"However, this shift might benefit India and ASEAN countries. Continued US-China polarisation also risks exacerbating geopolitical divisions in the region, increasing risks of disruption to the global supply of semiconductors," it added.

What to expect from Trump 2.0?

In a second Trump administration, Moody's expects large fiscal deficits, protectionist trade actions, climate-measure rollbacks, a stricter stance on immigration, and easing regulations.

Trump is likely to pursue more aggressive immigration policies, including increased deportations, the construction of additional border barriers, stricter visa regulations, and reduced asylum grants.

"Although aimed at reducing unauthorised immigration and prioritising legal immigration based on merit, they could lead to labour shortages in sectors that rely heavily on immigrant labour, such as agriculture, retail, hospitality, construction and healthcare," Moody's Ratings said.

In Europe, the reduced US support for Ukraine might increase European governments' fiscal burdens as governments initially try to compensate for the US support, Moody's said.

"US disengagement from NATO would also increase security risks in Europe by emboldening Russia, putting countries along NATO's eastern border at greatest risk. Also, the proposed blanket tariffs and US-China tensions will likely hurt trading partners in the region, but could indirectly benefit Europe by making it a more attractive investment destination because of its relative policy stability," the US-based rating agency said in its report released late evening.