Why US midterm elections may not change the tariff equation for India
Experts believe that the tariff policies laid down by US President Donald Trump are unlikely to be pulled back completely
- Nov 5, 2026,
- Updated Nov 5, 2026 12:30 PM IST
The win of the Democrats in the US midterm elections is unlikely to soften Washington’s tariff and trade stance as of now, but it could give India some reprieve on the trade deal.
Experts believe that the tariff policies laid down by US President Donald Trump after assuming presidency in January 2025 are unlikely to be pulled back completely. However, India could get some more room in the negotiations for the bilateral trade deal.
Madhavi Arora, Chief Economist, Emkay Global Financial Services noted that the midterms outcome probably will not change the tariff structure much, but it will change Trump’s incentives: fewer new escalation tools, more pressure to deliver consumer affordability, and deals before 2028. “Future escalation must go through slower, investigation-based Section 301 and 232 actions, which reduces the risk of surprise tariff shocks. Trade remains one of the few areas he controls alone, however, so headline volatility will persist even as the bias softens,” she said.
For India, the urgency of a deal has faded, she further said. However, the main risks are Section 232 sector tariffs on pharma and electronics and any setback in Russia or Iran diplomacy that brings back pressure over India’s oil imports.
CareEdge Ratings, in a note, said that it does not expect any tariff relief from the new Congress. Indian goods pay the normal MFN duty plus a 10% Section 301 levy (forced labour levy), and that layer, like the Section 232 and Section 338 actions, is set by the President, with Congress having only a limited role.
Crucially, the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed on 18 September, permits tariffs of up to 100% on the largest buyers of Russian crude—a group that includes India. “The executive waiver issued on 16 October has no expiry date, and a Democrat-led Senate is no softer on Moscow. Thus, the tail risk remains even after the political rejig,” it underlined.
The Section 301 investigation by the US Trade Representative against India and 15 other countries on excess manufacturing capacities also continues and levy of further tariff is anticipated.
Ajay Srivastava, Founder, Global Trade Research Initiative also noted that a midterm setback is unlikely to change America’s protectionist trade direction. This is 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,” he said. To act without Congress, the US President will continue to rely on existing powers—such as Section 232 and Section 301—using Executive Orders, Treasury sanctions, and USTR rules to apply unilateral trade pressure, he further cautioned.
With regard to the trade deal, Srivastava said New Delhi should insist on clear, enforceable reciprocal concessions, consistency with WTO rules and full freedom to protect its energy security and development priorities. “The pressure to announce a deal must not outweigh the need to secure one that serves India’s long-term interests,” he said.
The US remains India’s largest export destination with merchandise exports to the US amounting to $50.81 billion between April and September 2026 as against $45.73 billion in the same period a year ago.
The win of the Democrats in the US midterm elections is unlikely to soften Washington’s tariff and trade stance as of now, but it could give India some reprieve on the trade deal.
Experts believe that the tariff policies laid down by US President Donald Trump after assuming presidency in January 2025 are unlikely to be pulled back completely. However, India could get some more room in the negotiations for the bilateral trade deal.
Madhavi Arora, Chief Economist, Emkay Global Financial Services noted that the midterms outcome probably will not change the tariff structure much, but it will change Trump’s incentives: fewer new escalation tools, more pressure to deliver consumer affordability, and deals before 2028. “Future escalation must go through slower, investigation-based Section 301 and 232 actions, which reduces the risk of surprise tariff shocks. Trade remains one of the few areas he controls alone, however, so headline volatility will persist even as the bias softens,” she said.
For India, the urgency of a deal has faded, she further said. However, the main risks are Section 232 sector tariffs on pharma and electronics and any setback in Russia or Iran diplomacy that brings back pressure over India’s oil imports.
CareEdge Ratings, in a note, said that it does not expect any tariff relief from the new Congress. Indian goods pay the normal MFN duty plus a 10% Section 301 levy (forced labour levy), and that layer, like the Section 232 and Section 338 actions, is set by the President, with Congress having only a limited role.
Crucially, the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed on 18 September, permits tariffs of up to 100% on the largest buyers of Russian crude—a group that includes India. “The executive waiver issued on 16 October has no expiry date, and a Democrat-led Senate is no softer on Moscow. Thus, the tail risk remains even after the political rejig,” it underlined.
The Section 301 investigation by the US Trade Representative against India and 15 other countries on excess manufacturing capacities also continues and levy of further tariff is anticipated.
Ajay Srivastava, Founder, Global Trade Research Initiative also noted that a midterm setback is unlikely to change America’s protectionist trade direction. This is 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,” he said. To act without Congress, the US President will continue to rely on existing powers—such as Section 232 and Section 301—using Executive Orders, Treasury sanctions, and USTR rules to apply unilateral trade pressure, he further cautioned.
With regard to the trade deal, Srivastava said New Delhi should insist on clear, enforceable reciprocal concessions, consistency with WTO rules and full freedom to protect its energy security and development priorities. “The pressure to announce a deal must not outweigh the need to secure one that serves India’s long-term interests,” he said.
The US remains India’s largest export destination with merchandise exports to the US amounting to $50.81 billion between April and September 2026 as against $45.73 billion in the same period a year ago.