US President Donald Trump has imposed sweeping tariffs and the move has sent shockwaves across global markets. India is relatively resilient in comparison to several Asian peers and analysing the impact, noted market expert, Nilesh Shah, Managing Director of Kotak Mahindra AMC raised concerns about the tariffs triggering slowdown and fanning inflation. He summed up his observations with a Bollywood-inspired phrase, “Picture Abhi Baki Hai.”
Trump tariff worries: History raises concerns about slowdown, inflation
Trump’s tariff announcements has raised worries about significant economic downturns based on how similar instances in the past led to economic downturn due to by protectionist policies Shah pointed out that mass tariff hikes have only happened twice in US history, one in 1828 and the another was in 1930, with a gap of 100 years. “The result of this was recession and the Great Depression. There is a high chance that the 2025 mass tariff hike will result in lower growth and higher inflation,” Shah noted.
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His reasoning was if US markets correct, consumption accounting for two-thirds of the US economy could take a hit. Inflation will rise, and may lead to wealth erosion.
What does Trump tariff mean for emerging markets
Speaking in details about what it could mean for emerging markets, “this could spell stagflation, while for the US, it would be labelled a hard landing.” he added.
With the universal 10% tariff kicking in on April 5 and steeper reciprocal tariffs following on April 9, global markets are now strategizing their next moves. The world is not sitting idle,
“The world will respond to US tariff through currency weakening, negotiation with the US under clause 4 of the order to satisfy their concerns, counter-tariffs, and may be lobbying within the US to challenge this order in the judiciary,” he added.
Trump tariff: India’s Dilemma
Unlike other nations that face aggressive tariff hikes, India’s hit has been relatively lower. But that does not mean it is unaffected. Shah notes, “We can bring footwear and garments business from Asian peers if we get our act together.”
He also warns that India must stay vigilant against Chinese dumping. Instead of retaliatory measures, Shah noted, “We should negotiate hard with China to create a win-win situation rather than the usual lose-lose situation.”
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