Following the midterm polls, Republicans are set to lose majority in both chambers of Congress. Somewhere, the Republicans have acknowledged that the Iran war cost them the midterm polls.

Speaking to Fox News, Trump said that while most Americans endorse his Iran policy, they are unwilling to accept the short-term consequence of paying more. “I understand that, but I don’t agree with it,” Trump told the news channel.

Clearly, Trump has already indicated that he would not renew attacks on Iran. While that may come as a sigh of relief to the world, Trump’s decision on the Strait of Hormuz will have far-reaching implications on the global economy — not only will this bring down oil prices but will also unchoke the key trading routes.

“If he decides to come to an agreement that allows the Strait of Hormuz to open up completely and the present naval blockade of allowing all ships to pass through, it will definitely cool down the crude prices. The key reason for energy prices being so high is the escalated shipping and insurance costs,” Pramit Pal Chaudhuri, Head of India Practice, Eurasia Group told The Secretariat.

Poll Impact On India

Small wonder that a reduction in global oil prices will bring cheer to Indian policymakers.

In the April-September period, the country’s crude oil import bill increased by 48% to US$ 91.52 billion. It was only US$ 61.87 billion in the corresponding period of the previous fiscal, as per data compiled by the Petroleum Planning and Analysis Cell (PPAC).

Besides, the high crude prices have pushed up inflation as well.

India-US ties under Trump have also hit rough weather.

The Trump administration, in October, suspended the participation of tech and outsourcing companies from the Permanent Labor Certification (PERM), a programme which facilitated these firms to sponsor foreign workers’ permanent residency in the US. The decision dealt a blow to Indian tech giants - Infosys, Tata Consultancy Services, HCL, and Wipro, to name a few.

Will the midterm poll results reverse the decision? Unlikely, as there is little support in the US for the H-1B visa programme facilitating outsourcing.

“Amid the rise of the artificial intelligence frame, the H-1B visa programme that facilitated outsourcing is effectively obsolete. That apart, Silicon Valley, which is still a dominant force, is looking at things differently today. So, this is effectively a dead economic model,” Chaudhuri said.

India-US Trade Deal

India and the US have mostly frozen the trade deal.

Though Ajay Srivastava, Founder, Global Trade Research Initiative (GTRI), in a report said that Trump may want to expedite the trade deal with India, several exporting houses have argued that it would be wise to adopt a wait-and-watch policy.

“While it is understood that the India-US trade deal is almost done, we should not be in any hurry. It will be prudent to wait and figure out what the effective tariffs would be for other countries like Vietnam or Bangladesh,” said Pankaj Chadha, Partner and CEO, Jyoti Steel Industries and chairman, Engineering Export Promotion Council (EEPC).

Experts opined that the ramifications of the US midterm polls will be felt gradually.

It must be noted that though Trump will continue to enjoy control, the Congress will have a stronger grip over the coffers. The immediate beneficiaries would be the neighbouring states of the US -Canada and Mexico.

“Trump will have to tone down many of his policies, and he would now have to figure out a way to drive consensus, and extracting funds too will not be easy going ahead,” an analyst said.

In practical terms, the losses in midterm polls would mean more legislative resistance and greater scrutiny of foreign policy initiatives with respect to Ukraine, Iran, Russia and global trade.