Trump 2.0 Presidency Could Benefit India But Poses Risks for Rest of Asia

A second Trump presidency could prove advantageous for India while posing economic and geopolitical challenges for much of the rest of Asia, Nomura says.

The analysis suggests India may emerge as a relative beneficiary of Trump’s policies due to its domestic demand-driven growth model, potential gains from supply chain shifts away from China, and its strategic importance as a regional counterweight to Beijing.

“India has gotten along well under both the Republican and Democratic administrations. The US sees India as a strategic counterweight to China, with considerable synergy in defence, security, clean energy, and people-to-people ties. India too sees the US as an important partner in its economic growth story,” Nomura analysts wrote in a note.

The report estimates Trump’s proposed tariffs and trade policies could reduce China’s GDP growth by 0.4 percentage points in 2025, with knock-on effects for export-dependent economies like South Korea and Taiwan.

Nomura forecasts a 0.3 percentage point hit to Taiwan’s growth and a 0.2 point reduction for South Korea. The analysts expect more modest impacts of around 0.1 percentage points for India and most Southeast Asian nations.

While higher US tariffs would likely weigh on Asian exports broadly, India’s relatively low trade exposure and focus on services exports could insulate it from the worst effects. The country may also benefit from accelerated supply chain diversification as companies seek alternatives to China-based manufacturing.

Nomura suggests India’s pharmaceutical and IT services sectors could gain market share if the US further restricts Chinese companies. The geopolitical ramifications of a Trump presidency may prove even more consequential than the direct economic impacts.

The report posits that reduced US engagement in Asia could embolden China, raising risk premiums for Taiwan and potentially benefiting India as an alternative strategic partner for the US and its allies. Trump’s transactional approach to alliances could force countries like Japan and South Korea to increase defense spending, straining government finances.

For financial markets, Nomura anticipates heightened volatility and potential outflows from emerging Asian equities in the event of a Trump victory. The analysts expect the Chinese renminbi to face particular pressure, forecasting a potential 22% depreciation against the dollar if Trump follows through on threats of 60% tariffs on Chinese goods.

They suggest the Indian rupee may prove relatively resilient amid capital reallocation flows. The report underscores the divergent impacts a second Trump term could have across Asia. While creating headwinds for export-oriented manufacturing economies, Trump’s policies may accelerate India’s rise as an economic and strategic counterweight to China in the region.