US President Election 2024: How Trump's Victory Presents Challenges for Trudeau but Opens Doors for Modi

Donald Trump's electoral college win might spell economic and political troubles for Canadian Prime Minister Justin Trudeau while promising some diplomatic gains for Indian Prime Minister Narendra Modi.

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Trouble for Trudeau

Analysts say the Trump victory will worsen Canada's economic problems, particularly if trade tensions increase because 75% of Canadian exports rely on the U.S. market. The flow may be undermined by tightened trade policy or tariffs, forcing Canada into recession. In addition, increased U.S. restrictions on immigration may push people up to Canada, which would further make the Canadian economy and social systems complex.

The blows may come at a particularly vulnerable time for Trudeau, with slowing economic growth, rising costs of living, and elections on his plate. There is increasing suspicion that Trudeau, in office since 2015, might fall to the Conservative challenger. Trudeau's diversification of trade, however, has been limited by persistent tensions with bigger partners such as China and India.

Relations between Trump and Trudeau have not always been cordial. Trump recently sent a letter to Trudeau labeling him a "far-left lunatic" over Canada's COVID-19 vaccine mandate for cross-border truckers. Earlier this year, in 2018, during the G7 summit in Quebec, Trump tweeted Trudeau as "dishonest and weak," including pulling out of the summit early as a protest. Nonetheless, despite all this, Trudeau said recently that he congratulated him for his work and hopes for the continued collaboration between the U.S and Canada.

However, Trudeau had fretted over the prospects of a Trump presidency before. According to an analysis by Desjardins Economics, the effects of Trump's policies are likely to reduce Canada's GDP by 1.7% in 2028. According to the Canadian Chamber of Commerce, a proposed 10% U.S. tariff on Canadian products is likely to slice Canadian income by 0.9% a year and negatively affect labor productivity. Of course, if a full-scale trade war begins, income could lose 1.5% annum and productivity plunge more, in addition to key economic troubles.

Opportunities for Modi

On the other hand, Modi and his government hope to exploit Trump's return to their advantage and further bolster U.S.-India ties. One of the first world leaders to congratulate Trump, Modi is optimistic that renewed cooperation will once again start blooming. Indian officials believe that the Trump administration might pressure India much less over the recent allegations of extra-judicial action taken against Khalistani activists in North America, which the Biden administration had scrutinized in the recent past.

Analysts say Trump is going to focus more on containment of China, which makes India an important strategic partner. So much investment by the U.S. in this first term, which included giants like Apple substantially scaling their operations here. According to professor Irfan Nooruddin of Georgetown University, he says, "India is likely to be quite an important country in the U.S. foreign policy, particularly in terms of security and defense cooperation.".

Although the bilateral relationship may further provide economic benefits for India, New Delhi officials know well that a Trump presidency would pose new trade challenges: As an example, Trump had previously targeted India for high tariffs. His tariff proposal on importing 20 percent imports across the board might hit the Indian economy very hard. Bloomberg Economics estimates it may hit India's GDP as high as 0.1 percent by 2028.

On the other hand, high-tariff imports from China may indirectly affect Indian trade if the preference by American companies shifts alternative options. In that scenario, if China decides to flood the Indian market with cheap commodities after a change in trade direction, Indian officials may retaliated Chinese imports through tariffs to save local industries.

In a sense, Trump's victory has mixed significance for Trudeau and Modi. While it may add more economic stress and political pressure for Trudeau, it presents Modi with an opportunity to further solidify relations with the U.S. but with some challenges in terms of trade