US Midterm Election Impact: What It Means for India’s Trade and Stock Markets

The Democratic Party’s gains in the US House of Representatives and Senate in the midterm elections could have implications for the global economy, according to experts. A possible check on President Donald Trump’s aggressive approach to issues such as Iran and international trade could help reduce economic uncertainty. However, major changes to the US protectionist trade policies are unlikely, says Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI). He expects Trump to push for an early trade agreement with India, given its importance as a major market. The President is also likely to retain significant powers over import tariffs, immigration and foreign policy. Both Republicans and Democrats broadly support strengthening domestic manufacturing, creating jobs for American workers and protecting local industries through import tariffs. Trump could continue exerting trade pressure on other countries through executive orders, Treasury sanctions and regulations issued by the Office of the United States Trade Representative (USTR).

Experts say the US may press India to open its markets further to American agricultural and industrial products while offering greater concessions to US companies under a bilateral trade agreement. Unlike conventional free trade agreements, where both countries generally reduce or eliminate Most Favoured Nation (MFN) tariffs under World Trade Organization (WTO) rules, the proposed India-US arrangement could require India to lower duties on several industrial and agricultural products while the US retains its existing MFN tariffs, according to GTRI. Following the US Supreme Court’s decision to strike down reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA), several countries reportedly paused negotiations on similar trade arrangements, while India continued discussions. Experts have advised India to safeguard its energy security, development priorities and policy flexibility while negotiating any agreement. Meanwhile, the weaker US dollar index and lower bond yields following the election developments have offered positive signals for Indian equities. US stock markets gained up to 2.9%, while international gold prices rose 3.5% to $4,069 per ounce and silver climbed 5.3% to $52.3. In Hyderabad, the price of 10 grams of pure gold reached ₹1,46,600, while silver stood at ₹1,92,000 per kilogram, according to the figures provided. Analysts say crude oil prices and quarterly corporate earnings will remain key factors influencing Indian markets over the longer term.