NEW DELHI — While Donald Trump’s aggressive new tariff push rattles global markets and raises fresh fears for the U.S. economy, Indian investor and author Ruchir Sharma believes it could open a rare window of opportunity for India and other emerging economies.
In an insightful conversation with India Today’s Rahul Kanwal, Sharma painted a bigger picture — one where America’s turn inward under Trump ironically pushes capital and growth opportunities outward, with India well positioned to seize the moment.
“Foreign capital inflows into India had dried up,” Sharma admitted. “But that could change now.” Trump’s return to tariffs as a centerpiece of U.S. trade policy, Sharma argued, risks slowing the American economy and weakening the dollar — a recipe that typically favors emerging markets.
America’s Loss, India’s Gain?
The math, Sharma said, is straightforward: economists estimate that a 1% rise in U.S. effective tariffs knocks 0.1% off GDP growth. Trump is aiming for a baseline 10% tariff rate this time — meaning the U.S. could see growth slow by up to 1% just from trade tensions.
“A weaker dollar is generally a more conducive environment for emerging markets,” Sharma explained, noting that such conditions tend to drive both portfolio and direct investment into economies like India.
And while India’s equity markets are no longer cheap, their depth and diversity remain unmatched in the emerging world. “More than 500 Indian companies have a market cap above a billion dollars — you don’t see that kind of spread anywhere else in the developing world,” he said.
Breaking from Wall Street’s Shadow
Perhaps most intriguingly, Sharma suggested that Indian markets may finally begin moving independently of Wall Street. “For years, whatever happened on Wall Street echoed globally. But now, India could start charting its own course,” he predicted.
India’s trade posture is also shifting. After a long spell of protectionism, New Delhi is actively chasing new trade agreements, a move Sharma called “essential” for a developing country. “We can’t afford to follow America’s model of turning inward,” he warned.
However, Sharma cautioned against viewing India’s trade prospects solely through a U.S.-China lens. Of the ten fastest-growing trade routes globally, eight don’t involve the U.S., five involve China, and India features in just one. India, he argued, must rethink its regional positioning within an Asia reshaped by Chinese and Southeast Asian supply chains.
“Some of that distress with China has to ease,” Sharma suggested, hinting that both economic pragmatism and geopolitical pressure might soften Beijing’s stance.
The Global Stakes
While Trump’s strategy often appears chaotic, Sharma believes there’s a pattern. “There’s a method to his madness,” he quipped. Tariffs might be a blunt weapon, but they resonate with American voters disillusioned by globalization’s uneven benefits.
“He loves to throw a bomb in the room, watch the fallout, then recalibrate,” Sharma said. He described Trump’s tactic of starting negotiations with extreme demands (like 30% tariffs) before settling lower (say 10%) while claiming victory as classic Trump strategy.
The real risk, Sharma noted, lies not in Trump’s provocations, but in China’s response. “Markets didn’t panic when Trump announced new tariffs — they did when China retaliated,” he said, warning that miscalculations could spiral quickly.
Yet amid the disruption, Sharma sees an unlikely global upside. “Whether Trump makes America great again is debatable,” he said, “but he might just make the world great again by forcing complacent leaders to act.”
Germany, for example, has undertaken major fiscal reforms, while other nations are rethinking supply chains and trade dependencies. India, Sharma concluded, must do more than react — it must lead.
“Trade, capital flows, and market maturity are aligning for India. This could be our chance,” he said.
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