Trump's trade stance may benefit India, Asean: Moody's report

India and ASEAN countries are likely to benefit under the Trump administration in the United States as trade and investment flows will drift away from China, according to a report released by global rating agency Moody's on Friday.

"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," the report stated.



This shift is expected to favour India and ASEAN (The Association of Southeast Asian nations) countries. However, continued US-China polarisation could intensify geopolitical divides in the region, increasing risks of disruption to the global supply of semiconductors, the report added.

Donald Trump defeated Kamala Harris in the US Presidential election on November 6.

"In a second Trump administration we expect large fiscal deficits, protectionist trade actions, climate-measure rollbacks, a stricter stance on immigration, and easing regulations," the report noted. Fiscal deficit and debt will record a significant increase in the United States due to the impact of policies proposed by Trump. His protectionist trade approach could disrupt global supply chains and negatively impact industries that depend on imported goods. Additionally, the administration's climate agenda is likely to shift away from current policies to emphasise the role of fossil fuels in achieving "American energy dominance," and delaying the transition to a low-carbon economy, the report mentioned.


Trump is also expected to adopt stricter immigration policies, "including increased deportations, the construction of additional border barriers, stricter visa regulations, and reduced asylum grants" which could lead to labour shortages in sectors like agriculture, retail, hospitality, construction, and healthcare that depend on immigrant workers.

The International Monetary Fund (IMF) has projected a growth of 2.8% in 2024 for the United States in its latest economic outlook. For India, the projection is 7% in 2024-25.