“Change,” as the saying goes, “is the only constant in life.” But the pace of change varies across time periods. Lenin famously said that “there are decades where nothing happens; and there are weeks where decades happen.” Trump 2.0 belongs to the latter category of periods of fast and furious changes. The consequences of President Trump’s policies are unravelling fast. The impact will be felt in global trade, global growth, geopolitics, and resets in power equations.
Till 30th July 2025, the near consensus was that there will be a trade deal between the US and ‘friendly’ India. President Trump himself once declared that “India would be one of the countries with which US will have an early trade deal.” The market had partly discounted this. Then on 30th July came the shock: Trump imposed 25 percent tariff on India – a rate much higher than the tariffs imposed on India’s competitors. This was followed by the secondary tariff of 25 percent on Indian exports to the US.
India responded strongly describing the tariffs as ‘unfair, unjustified and unreasonable.’ These are strong words, but within the constraints of diplomacy. Actually, the Trump tariffs are hypocritical and totally devoid of logic. There is no reciprocity in the so-called reciprocal tariffs. And the penal tariffs – the so-called secondary tariffs – are totally hypocritical based on the personal likes and dislikes of Donald Trump. Why was a 50 percent tariff imposed on Brazil? Because Trump did not like Brazil’s prosecution actions against his friend former Brazilian President Jair Bolsonaro. Why 30 percent tariff on South Africa? Because South Africa is not preventing persecution of the whites. Why 35 percent tariff on Canada? Because Canada is not restricting the trade in fentanyl. Why 25 percent penal tariff on India? Because India is buying oil from Russia. But EU also is buying energy from Russia, and the tariff is only 15 percent. When Trump was asked in an interview about the US itself buying palladium, uranium and fertilizers from Russia, his response was “I am not aware of that.” Why was China given another 90-day extension for tariff talks? Because with near 90 percent market share in rare earth minerals and magnets, China has enormous leverage, which other countries do not have. In brief, there is no logical foundation or sound economic rationale for Trump’s tariffs. The US trade policy is unfair, unjustified, unreasonable, and hypocritical. But unfortunately, the US president has enormous powers, and Trump is wielding that. Trump has weaponized tariffs.
Trump’s policies have triggered resets in global power relations. The US-India friendship built over the last 25 years has been strained. India- China relationship, which had strained badly after the Galwan clash, is improving. China’s decision to remove restrictions on export of rare earth minerals and magnets, fertilizers and tunnel boring machinery to India reflects improving relations between the two countries. Relations among BRICS are getting better. These emerging resets will have economic consequences.
Market gurus always advise investors to ignore the noise because noise usually has only short-term impact. What is happening now is big noise. But this, too, shall pass. When noise gets louder and impacts the market, smart investors should seize the opportunity and accumulate stocks for the long-term. After some time, the present noise would die down and there will be some new noise. The market will ignore this noise and move ahead in tune with corporate earnings.
