American midterm results will not have an impact on India-US interim trade deal
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The Democrats' sweeping victory in the US midterm elections is unlikely to affect the India-US interim trade agreement, as the pact does not require formal Congressional ratification, sources said. However, ongoing Section 301 investigations into forced labour and excess industrial capacity could influence Washington's tariff structure and the finalisation of the agreement.
New Delhi: The US mid-term elections, which delivered a significant rebuke to President Donald Trump and the Republicans, will not directly affect the India-US interim trade agreement, according to sources.In the elections, the Democrats gained control of the House of Representatives and the Senate, flipping seats and traditionally Republican party strongholds in a massive blue wave across America.
Sources said that the India-US interim trade deal does not need formal Congressional ratification.
The two countries finalised the framework for the first phase of the pact in February this year. However, changes in the US tariff landscape have led to further negotiations on the pact.
The US has imposed an additional 10 per cent import duty on number of countries including India from July 24. These tariffs follow a US investigation into forced labour issues under Section 301 of the US Trade Act of 1974. This duty is over and above the existing MFN (most favoured nation) rates.
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India is also engaged with the US on the second Section 301 investigations over concerns related to excess industrial capacity.
Sources said the US must complete the second probe to finalise its tariff structure for trading partners.
On the midterm results, economic think tank GTRI has said that the adverse results would not change Trump's trade direction because both Democrats and Republicans now favour economic nationalism, domestic manufacturing, and strong supply chains.
"Since Democratic lawmakers also support protective tariffs for local union workers, America's overall trade posture will remain intact," GTRI Founder Ajay Srivastava said.
In recent months, both sides have stated that the trade agreement is almost ready.
India is seeking lower tariffs for its goods in the US market than its competitor nations such as Bangladesh, Vietnam and Cambodia.
"We have concluded most of the discussions and are fine-tuning the agreement," Commerce and Industry Minister Piyush Goyal said last month. He had expressed hope that it would be finalised soon and operationalised once India secures a competitive advantage over its peer countries.
The US was India's largest trading partner in 2025-26. The outbound shipments to the US rose 11.11 per cent to USD 50.81 billion from USD 45.73 billion during April-September 2026-27, while imports grew by 25.98 per cent to USD 32.32 billion during the first half of this fiscal from USD 25.66 billion during April-September 2025-26.
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
