Tag: Donald Trump Tariffs

Walking On Hot Coals, India’s Tariff Challenge

By Jasdev Singh Rai

India has come through many crises but the new Trump order levying a punishing 50% tariff on Indian goods, allegedly for buying Russian oil, may be one of the most complex challenges to India’s long pursued ‘strategic’ autonomy in international affairs. India is being asked to pick a side or suffer economic disaster from which it could take a long time to recover. Depending on Russia and China, this stress could go on for a long time.

As a regional rather than world power, India’s dexterity in balancing between different superpower camps is legendry. During the cold war, it led the Non Aligned Movement (NAM) giving immunity to many developing and underdeveloped countries from demands to join the American or Soviet camp.

India traded with USA and bought arms from the Soviet, now Russia. It relied on Russian veto at UN as well as support from Britain and USA. India’s diplomatic skills have been remarkable.

However, this time the threat to India’s is different. Donald Trump doesn’t do international politics by the book. Officially he has given India an ultimatum to stop buying cheap Russian oil, so that he can put pressure on Putin to negotiate peace in Ukraine. But the oil may just be a distraction.

There are other motives. He wants American companies to stop using India as a cheap manufacturing and IT base and bring the ‘jobs’ back to USA. Prime Minister Narendra Modi shifted from Manmohan Singh’s ‘made in India’ policy to ‘make in India’ inviting multinational companies to shift productions form China to India. It started working. Trump however promised his base to pursue a policy of onshoring.

Secondly, Trump wants the BRICS to end or at least be weakened. He sees the BRICS project to develop an alternative international reserve currency as a great threat to the Dollar and American hegemony. If India comes out of BRICS, it is likely to stop BRICS expanding. Some may even walk with India.

Thirdly, he wants to encircle China, USA’s biggest competitor in influence, power and trade. India’s ‘strategic’ neutrality frustrates USA. India is member of the defence pact, ‘QUAD’ (Australia, India, Japan and United States) but also of BRICS.

There is also a personal pique that might have led to Trump targeting India. For his alleged Noble Prize bid, Trump is trying to build a portfolio as a peace negotiator. He claimed to have stopped the India-Pakistan war in June 2025. India has denied any Trump influence.

Together, this has left Indian diplomacy and its government with one of the most testing times. On the one hand is its deep relationship with Russia as a reliable source for its defence needs and now cheap oil. Russia is thought to have persuaded China to back off from border incursions.

On the other hand is India’s growing engagement with United States as a geopolitical partner, particularly against China. Indian business ties with USA are growing. Most Indians dream of migrating to USA rather than Russia or China. Indians have done well in USA. As a democracy, it is considered to be an ideologically aligned to Democracies.

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Trump has turned the heat on India to come off the fence or what India calls ‘strategic’ autonomy in international relations. The 50% Tariff threat will affect India’s economy substantially and could even force some businesses to fail, particularly in the textiles, garments, steel, gems and some auto-components fields. India’s trade with USA is a $212 Billion partnership. The USA is its biggest export market while India’s large market only features as tenth in America’s international trade.

Trump increased his coercive approach with collateral pressure. He invited Pakistan’s Army Chief, General (now Field Marshall) Asim Munir to lunch in June. He has shown interest in developing Pakistan’s mineral resources and oil. Pakistan is India’s birth enemy.

The second bee in the bonnet for Modi’s Government is the Khalistan issue which USA seems to be tacitly acknowledging. On 24th July, President Trump sent a signed letter to Gurpatwant Singh Pannu of the Sikhs for Justice.

The carefully crafted letter makes no reference to Khalistan or alleged threats to Pannu’s life from Indian agents but it cites America’s intention to make its farmers competitive in a level playing field. This was an indication for India to reduce subsidies to its farmers and stop import tariffs on American agriculture produce. The policy will ironically affect Punjab’s Sikh farmers the most. The letter itself is a message to India, that US could support the Khalistan movement.

India’s has decided to sit it through, keep its head down, continue trade negotiations, reduce tariffs on some US imports, reduce the trade deficit and wait for Trump-Putin talks to diffuse Trump’s frustration at the grinding Russia-Ukraine war that he was supposed to end within 24 hours of taking office. Putin will have India’s predicament in mind when he meets Trump.

It is also not in China’s interest to see India’s economy faltering and India moving closer into the American orbit. BRICS is China’s counter force to American hegemony. But India too needs the BRICS to maintain ‘strategic’ autonomy.

India has one asset that Trump’s USA does not. The United States has largely interacted in the international world through might, ideological hegemony, financial strength and interventions. It is not quite used to coexistence or delicate diplomacy. It makes exceptions as ‘pragmatic’ suspension but hopes things will change in its favour one day.

India on the other hand came from a very weak hand after decolonisation. It has learnt to balance its interests with geopolitical trends but also keep a foot in most camps. It has a leading role in the Commonwealth, a powerful player at UN, a good friend of many African countries, good relations with most South East Asian countries, member of BRICS and Quad and immense respect in the Middle East where it supplies cheap labour and goods.

Modi has a lot to lose if he cowers to Trump’s demands. India’s prestige in the world will be greatly affected. Countries will see it as weak. Modi himself will start to lose the strong man image in India and the world.

At the same time many powerful Indian businesses will try and persuade Modi to compromise with Trump since many are dependent on trade with USA. However India has the financial reserve to placate them.

Trump has many cards to play, a word he likes in the game of deal making. Warnings by experts that India will go into China’s camp are unfounded.

This is going to be a long drawn issue as it is not merely about the Russian oil. India is walking on burning coals as its foreign policy competence is tested to its limits. If it comes out of this with its integrity, its influence in the world will increase. If it compromises, that influence will decrease.

‘Indian Investors Need Not Worry About Tariff War or Indo-Pak Tension’

By LokMarg

Jitendra Luthra, an investment advisor based in UP, says the Indian fundamentals are strong enough to absorb any untoward disruptive incident in the long run. His views:

I have a piece of advice for all stock market investors, big or small, who have been losing sleep ever since US President Donald Trump announced a new tariff regime: Trump himself is still not clear about the intensity and degree of the tariffs he wants to impose on a specific country. White House is still rejigging the figures. So allow the dust to settle down and do not press the panic button.

My second advice is: the recent military flare-up between India and Pakistan will have little impact on the Indian market, though there could be minor upheaval initially. It is the Pakistan Stock Exchange (PSX) which will find it difficult to recover from the shock caused by the conflict as well as its after-effects. Stock markets move not only based on sentiments but also on the fundamentals of its corresponding economy.

Coming back to US tariffs, it is becoming increasingly clear that the real cause of the stocks tanking was US posturing against China. Currently, the two economic giants have reached a trade deal. Those who resorted to panic selling when the tariffs and counter-tariffs were hovering around 250% may now be regretting their decision.

Mind you, even while stock exchanges around the world felt the heat of reciprocal tariffs as soon as they were announced, the Indian stock market was arguably the first exchange to recover and successfully erase a majority of its losses. This is also seconded by the observations of big wig market experts like Bloomberg which touted Indian markets as “relatively safe” amid global volatility over Trump’s punitive move on friends and foes alike.

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Reports have also lauded our markets for having a much better capacity to withstand a potential global recession at any point of time and any kind of unfavourable global economic conditions. According to other stats available widely, India is far better insulated from tariffs, accounting for only 2.7% of total US imports, compared to China at 14% and Mexico at 15% making less or no impact on its market behaviour for long durations of instability.

The recovery of Indian stocks after the ceasefire was announced is also a clear indicator that our fundamentals are strong. On the other hand, Pakistan stocks tanked since global investors know where it stands vis-à-vis India – be it economy, infrastructure, resources, planning, skills, etc. Therefore our investors need not worry in terms of returns during or post escalation.

Another stronghold of the Indian markets is that we have, for a significant period, managed to limit Chinese investments resulting in any kind of substantial effects on China having minimal or least impact on India unlike the situations and threats faced by other global markets. Also, our manufacturing capacities and capabilities are growing rapidly for the past few years positioning India as an alternate to China as a manufacturing hub. This, along with our more conciliatory approach with Washington, is also keeping our markets and investments stable and safe.

Initially, 26 per cent duty was proposed by Trump and our institutions are negotiating the present rejig with America, aiming for $500 billion in bilateral trade by 2030. We, as investors, should also not be moved with such ups and downs and pros and cons in the local and global markets as they are not permanent. We should also remember that our economy is one of the most stable economies in the world having surpassed major slumps and recessions in the past only to emerge more successful and powerful.

As told to Rajat Rai

‘Market Meltdown Post Trump Tariffs Shall Pass; No Need To Panic’

By LokMarg

Anand Mirani, a Bengaluru-based businessman and investor-trader, breaks down the real reasons behind the market crash post-Trump tariffs with valueable advice for investors

The markets are bleeding. Portfolios are deep in the red. And yet, I haven’t panic-sold a single stock. Am I worried? Of course. But I’m not surprised. Markets thrive on clarity. Right now, we’re knee-deep in uncertainty—and that’s the real culprit behind this crash.

It all started with the Trump administration’s aggressive tariff announcements. No warning, no detailed negotiations—just loud declarations that unsettled investors across the globe. It’s not just about what was said, but how it was said. When a sitting president treats every trading partner—friend or foe—with the same heavy-handed approach, it sends a message: the US, as the world’s largest consumption market (contributing nearly 30% to global GDP), is calling the shots.

Now, you might ask: Aren’t the intentions behind these tariffs good for America?

On paper, they are. President Trump wants to rein in the nearly $2 trillion fiscal deficit, bring manufacturing back home, and reduce government expenditure. All noble goals. An American would agree with the vision.

But what about the execution? Because if the method creates panic, then even the best intentions can trigger chaos. So why are the markets reacting this way if the overall objectives seem positive?

The answer lies in the ripple effect of tariff hikes. When import duties rise, the cost of goods in the U.S. goes up. That burden ultimately falls on the consumer, leading to a drop in consumption. As spending slows, businesses start pulling back on new investments. Capital expenditure projects get shelved, and companies wait to see how trade talks unfold with different nations. And that wait-and-watch mindset fuels even more anxiety in the market.

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To make things worse, businesses are unsure of the exact cost implications across sectors. Import costs are complex, and without clarity, cash flow projections become hazy. Add the looming threat of inflation and potentially higher government borrowing costs, and you have a recipe for rising equity risk premiums.

In financial terms:

Discounted Cash Flow = Future Cash Flows / (Risk-Free Rate + Equity Risk Premium)

If the numerator (expected future cash) is uncertain and the denominator (cost of capital) is climbing, the result is a lower present valuation of companies. That’s why we’re seeing a market selloff—the fundamentals aren’t matching the prices anymore.

Most investors are feeling the burn. Still, I’ve held my ground. Because long-term investing isn’t about avoiding losses—it’s about weathering storms.

So, what’s the way out for common investors like us?

The first step is capital preservation. In uncertain times, I shift allocations toward safer assets—gold, large-cap stocks, and sectors with more predictable cash flows. I avoid small and mid-caps with unclear growth visibility. I don’t panic-sell, and I certainly don’t make impulsive buys.

Most importantly, I stay patient. I wait for clarity on how the tariff situation unfolds, sector by sector, economy by economy. And for those who can afford it, hedging the portfolio—even if it comes at a cost—can be a useful insurance policy.

This isn’t the first market storm we’ve faced, and it won’t be the last. But if we understand the mechanics of what’s happening, and act with a cool head, we’ll come out of this stronger.

As told to Mamta Sharma