Trump’s America First Agenda Could Tighten H-1B Visas and Increase Tariffs, Impacting Indian Trade and IT Sectors

As former U.S. President Donald Trump eyes another term, his revived “America First” policy could bring significant changes to visa regulations and trade policies, with potential repercussions for Indian businesses and the extensive Indian diaspora in the United States. Key areas of concern are tighter H-1B visa requirements, elevated tariffs on imports, and the potential rollback of employment rights for H-4 visa holders. With the U.S. as India’s largest trading partner, accounting for over $190 billion in annual trade, these shifts could have a profound impact on India’s economy and the global tech industry.

Possible Tighter H-1B Visa Rules and Impact on Indian IT Sector

The H-1B visa program, critical for the movement of skilled professionals, is widely used by Indian IT companies. Nearly 80% of India’s IT exports rely on the U.S. market, making any changes to H-1B visa policies particularly significant. Trade expert Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), points out that stricter immigration policies under Trump could raise operating costs for Indian tech firms. Increased restrictions on H-1B visas may affect not only the workforce but also the innovation pipeline, as skilled professionals are critical in driving growth for both U.S. and Indian tech companies.

“Trump’s stricter immigration stance could lead to changes in visa rules, impacting Indian IT professionals and raising costs for Indian IT companies,” Srivastava explains. If tighter H-1B policies are implemented, it may discourage Indian IT companies from expanding in the U.S. market, potentially diverting them to other regions or accelerating domestic hiring strategies.

Potential Revisions to H-4 Visa Employment Authorization

For Indian families settled in the U.S., the H-4 visa program—providing work authorization for spouses of H-1B holders—remains a significant issue. Initially introduced in 2015 to support H-1B families, the employment authorization document (EAD) allows H-4 visa holders to contribute to the U.S. economy, making them more integrated members of American society.

During his previous term, Trump sought to repeal this program, an initiative later reversed by President Biden. However, immigration attorney Ashwin Sharma warns that Trump’s return could revive efforts to eliminate H-4 work permits, disproportionately affecting Indian families. “Trump’s renewed focus on hiring U.S. workers could mean a rollback of the EAD rule, presenting economic and personal challenges, especially for families facing long green card wait times,” Sharma explains.

The loss of H-4 employment rights would not only create financial burdens for families but could also affect community integration. With wait times for employment-based green cards exceeding a century for many Indian professionals, the removal of H-4 work permits could leave families in financial distress, with limited pathways to long-term residency.

Impacts on Indian Trade: Higher Tariffs and "Reciprocal" Barriers

Experts warn that Trump’s “America First” approach may also involve imposing higher tariffs on a range of Indian goods, including textiles, pharmaceuticals, and automobiles. Previously, Trump described India as a “tariff king,” citing imbalanced trade practices. According to Ajay Srivastava, if Trump were to broaden tariffs beyond China, Indian exporters could face higher customs duties, reducing competitiveness for Indian goods in the U.S. market.

“His America First agenda would likely push for protective measures, such as reciprocal tariffs on Indian goods, potentially adding barriers for key Indian exports like automobiles, wines, textiles, and pharmaceuticals,” Srivastava explains. Indian companies could find themselves priced out of the U.S. market, leading to revenue declines in affected sectors. Additionally, Trump’s focus on onshoring manufacturing could drive higher tariffs on imported goods to encourage domestic production, directly impacting India’s export-based industries.

Strategic Trade Shifts Amid Global Protectionism

As the U.S. strengthens its trade position, experts suggest that India may need to explore alternative markets or negotiate trade deals that ensure a more balanced relationship. The Indo-Pacific Economic Framework (IPEF), a multilateral trade bloc launched in 2022, could face uncertainty if Trump decides to pivot away from such partnerships. International trade expert Biswajit Dhar suggests that Trump’s return could usher in a new era of protectionism, potentially affecting sectors like electronics.

Opportunities for India in a Shifting Trade Landscape

While potential tariffs could pose challenges, experts argue that a more stringent stance on China might open opportunities for Indian exporters. As the U.S. seeks alternatives to Chinese suppliers, Indian manufacturers in sectors like electronics and pharmaceuticals may find new pathways to expand in the U.S. market. The evolving demand for advanced technologies, energy, and capital goods aligns with India’s export capabilities, potentially allowing India to meet U.S. supply needs while boosting its own economic growth.

Long-Term Economic Ties and Emerging Trade Dynamics

The U.S.-India trade relationship has strengthened over recent years, with merchandise exports from India to the U.S. rising by 46% between 2020 and 2024, reaching $77.5 billion. In addition to goods, service exports, including IT and business services, play a crucial role in bilateral trade, which stood at an estimated $70.5 billion in 2024. Notably, India is among the largest recipients of U.S. foreign direct investment, receiving over $66 billion in investments across industries such as IT, manufacturing, and scientific research.

Trade expert Ajay Sahai from the Federation of Indian Export Organisations notes that while Trump’s administration might push for “more balanced” trade, the reality may involve trade disputes arising from tariffs and restrictions. According to Sahai, ongoing protectionism trends suggest that India may have to prepare for potential challenges in sectors where it has a substantial export footprint.

A Potential Future for U.S.-India Trade Agreements

Amid these trade shifts, industry experts emphasize the need for India to be proactive in establishing a resilient trade framework with the U.S. Agneshwar Sen, Partner in Tax and Economic Policy at EY India, suggests that India may consider seeking a comprehensive trade deal to secure its interests. “We must be ready for a trade deal that is attractive to the U.S., while also protecting India’s core economic interests and creating new areas of cooperation,” Sen advises. Developing a balanced trade agreement with the U.S. could enable India to maintain market access and navigate the potential impacts of an America First policy.