Silicon Valley’s support for Donald Trump and what it means for India

Donald Trump’s confrontational stance on China, including tariffs and tech restrictions, resonates with Silicon Valley’s strategic interests

That Donald Trump will return to the White House is now looking increasingly likely. While the failed assassination bid is one thing many commentators believe has gone in his favour, it’s also the support from Silicon Valley that is fuelling that belief.

Republican presidential nominee, former U.S. President Donald Trump speaks after officially accepting the Republican presidential nomination on stage on the fourth day of the Republican National Convention at the Fiserv Forum on July 18, 2024 in Milwaukee, Wisconsin. (Getty Images via AFP)

Earlier this week, Elon Musk and the co-founders of Andreessen Horowitz spoke out in support of Trump marking a significant shift in Silicon Valley’s political landscape. These developments are being watched in India closely because if he wins the presidential race, Indian diplomats will have a complex balancing act to do.

At the heart of Silicon Valley’s support for Trump lies the promise of economic policies that are pragmatic and favour them. During his first term, the 2017 Tax Cuts and Jobs Act lowered corporate tax rates from 35% to 21%. This significantly boosted the bottom lines of major tech companies. If re-elected, he has promised to bring it down to 15%. For sectors such as technology that are investment hungry, such fiscal policies are irresistible. It allows them reinvest in more cutting-edge technologies, from artificial intelligence to quantum computing.

An equally compelling reason for Silicon Valley’s support to Trump is his approach to regulation. The tech industry is wary of increased antitrust scrutiny and privacy regulations. Trump’s earlier administration’s showed reluctance to break up tech monopolies or impose stringent data privacy laws on giants such as Meta, Google, and Amazon. These companies are wary of the European Union’s General Data Protection Regulation (GDPR) and similar initiatives, and they see in Trump a bulwark against ‘restrictive regulation’.

Geopolitics also plays a significant role in this alliance. Trump’s confrontational stance on China, including tariffs and tech restrictions, resonates with Silicon Valley’s strategic interests. The trade war, while disruptive, has underscored the need for tech sovereignty and the risks of over-reliance on Chinese manufacturing and markets. By aligning with Trump, Silicon Valley is signalling its support for a recalibration of global tech dynamics. This means a diversification and strengthening of alternative hubs such as India, to begin with.

A conversation with Prof G Venkat Raman, a Sinologist and a Fulbright Fellow who teaches geopolitics at IIM Indore only cements this view. “One thing we can take for granted if Trump comes to power is that like in his earlier tenure, Indio-US relationships will get closer.” There are second order outcomes to this, he explains.

The tech rivalry between China and US will get ratcheted further, he says. “It is inevitable then that tech investments will come to India.” To make his case, Raman points out to certain precedents. Apple was forced to build new supply chains for its non-China consumers because of the antagonism between the both countries. India’s demography and cheaper skilled labor offered natural advantages that attracted Apple to come and build a new supply chain. The Taiwanese company Foxconn followed soon after. “With the coming of Apple and Foxconn and new tech supply chains being built, it is inevitable more technology players will emerge and make India a highly competitive place to manufacture products,” he says. On the other side, India’s demographics are such that the appetite to consume technology is on the rise. This makes it even more attractive for American companies that choose to invest here.

Ironically, while India and China have been at loggerheads on most counts, when it comes to Green Tech, both countries are on the same page. This is what the Americans have a problem with and this will be exacerbated if Trump becomes President. The Biden administration had announced massive taxes on Chinese green tech companies in May. This will go up even more if Trump assumes power.

This is why Indian diplomats will have to do a tightrope walk, says Raman. “Trump does not believe in global warming or climate change”. In the past, Trump has walked out of such conversations. Him doing this again in the future cannot be ruled out either. “Trump can be very transactional with everyone he deals with. How India deals with him to further its cause to promote tech, should he win, will become a textbook case for students of geopolitics,” he says. Things can’t get more interesting than this.