| I’m Chris Anstey, an economics editor in Boston, and today we’re looking at India’s ties with the US under the incoming Trump administration. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X via @economics. And if you aren’t yet signed up to receive this newsletter, you can do so here. - France’s government faces a no confidence vote on Wednesday, as its prime minister warns the country has reached its “moment of truth.”
- Chinese leaders plan an annual gathering next week to map out economic targets and stimulus plans for 2025, people familiar with the matter said.
- Surveys since Donald Trump’s election win show US companies more upbeat in anticipation of pro-business policies and less regulatory burden.
When global markets were melting down in 2008, one economics reporter quipped that his personal “strategy” of having no assets at all was working out well. India might have something like that going for it when Donald Trump takes office next month and looks around for targets for tariff hikes. The South Asian nation, which has the world’s fifth-largest gross domestic product, doesn’t rate high in the list of countries responsible for the US trade deficit. In the first nine months of 2024, India barely squeaked into the top 10 trading partners having surpluses in goods with the US, at $33 billion. That’s a fraction of China’s $217 billion and an even smaller sliver of the $872 billion total. “Trump has tended to view trade policy through the prism of bilateral trade balances,” so India can take it as a “source of comfort” that it’s not high on the list, Shilan Shah of Capital Economics wrote in a note. While China has been singled out for potential tariff hikes of 60%, India might only see itself hit with the universal tariff that Trump has floated. A 10% levy would translate to just a 0.2% reduction in India’s GDP, Shah estimated. Even at the latest, unexpectedly modest, growth pace of 5.4%, that’s not a huge blow.  Trump and Modi wave to the crowd in Ahmedabad, India, in February 2020. Photographer: T. Narayan/Bloomberg Beyond avoiding major pain, India could even benefit if China gets walloped — keeping intact a friend-shoring trend that picked up steam during the Biden administration. Outgoing Treasury Secretary Janet Yellen visited India four times in less than a year, championing India’s rise in supply chains during her visits. The opportunity isn’t lost on New Delhi. “India is preparing to take advantage of any trade war Trump launches against China to boost its manufacturing sector,” Abhishek Gupta at Bloomberg Economics wrote in a recent report. Strong corporate fund-raising has left Indian enterprises with a “strong investment pipeline,” he wrote. And while relatively high tariff rates could leave India vulnerable to a reciprocal-levy approach from Trump, “a consensus is emerging” in India that reductions in import tariffs on the rest of the world by New Delhi “would help make the country a more competitive destination for manufacturing investment,” Gupta wrote. While India might be safer than others on the trade deficit front, that hasn’t given it immunity from Trump's tariff threats. The former president on the weekend warned the so-called BRICS countries (of which India is the ‘I’) that he would require a commitment that they wouldn’t create a rival currency to the greenback and threatened 100% tariffs on them if they did. Trump and Prime Minister Narendra Modi established a sort of strong-man bonhomie in the US president’s first term. India will doubtless hope that stands it in good stead as the trade announcements emanate. - Read Gupta’s full report on the Bloomberg terminal here.
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With China fully expected to be a trade-policy target in the second administration of Donald Trump, Citigroup economists took a look back at the “Phase One” deal that resulted in his first term. The conclusion: China fell well short of its import pledges, even accounting for Covid distortions. “The reality of Phase-One Deal implementation suggests there is no easy fix to the US-China trade imbalance,” economists including Xiangrong Yu wrote in a Dec. 1 note. “We estimate China completed less than 60% of the shopping list” to buy $200 billion more in 2020-21 versus 2017. It’s possible that terms for cooperation could be found outside of China trade commitments, as the recent fentanyl focus by Trump showed. Even so, “we tend not overestimate the chance of a new deal,” the Citi team wrote — highlighting the bipartisan focus in Washington on structural issues like China’s subsidies and the role of its state-owned enterprises. Agreement in such areas “could be rather tough to reach.” | 
