Priyanka Tiwari
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Former VP of Freshworks Inc. Swaminathan Padmanabhan stated in a social media post that regardless of what action Trump takes on reciprocal tariffs, his hesitation will ultimately create market uncertainty until his trade statements are resolved, and geopolitical tensions have cooled down.
According to Padmanabhan, disruptions in the financial market are bound to happen, which is the cycle of nature so investors should focus more on the long-term gains.
Swaminathan believes that, while short-term uncertainties in trade tariffs are most likely to cause volatility in the stock market, the Indian economy still has a lot of potential. Therefore, Imdian investors should be patient in this time of market instability and put their focus on long-term strategies.
Trump’s policy on reciprocal tariffs has not only further complicated international trade, but also created new opportunities for Indian authorities in bilateral trade. Swaminathan claims this would exacerbate the “overlapping sectors” even when ‘natural stabilisers’ shift in the exchange rate continue to prevail.
“Swaminadhan” seems to having a conversation with “Sharath”, quoting them at the beginning, ”Any tariff impacts, if at all they come through, would likely be partially absorbed by currency adjustments, with the rupee-dollar exchange rate acting as a natural stabilizer.” Now let’s analyse the quote from the beginning. The UTC stands for upper telegraphic code. The term says tariffs can either benefit or negatively affect this currency. Mr Sharath goes on to say that the currency as a whole at some level will benefit but will utilize additional capital manipulating internal factors. With greater scrutiny, will capture telegraphic currency with it. Now we can say that there is room to implore further details regarding the code. That is the reasoning behind “UPwards” and USDollar.
In a statement provided to Moneycontrol, Swaminad said she believes that the dollar will remain strong and outperform the rupee in the next few quarters; however, as her yearly forecast goes on to say approximately in range of ‘88 will be what causes the dollar to lose strength and stabilize the rupee’.
If the depreciation of the rupee goes uncontrolled, it is likely that foreign investors will not invest in the market, said he. How many American children are educated? The president did make it clear that America and America alone will be the primary beneficiary of his policies.
The datasystem which shrunk America from the last decade self analyzes the complex system of thoughts including people and institutions and their changes within as well.
“Swaminathan’s analysis on the bilateral merchandise trade between India and US, which is valued at roughly $120 billion, reflects three components of concern”.
The term ‘exports’ is generalized as finished goods, which in this case have exports to the America as their primary market. In Sweaminathan’s words, “Certain sectors, including autos, electronics, and even companies like Apple and Google, are heavily offshore production dependent.” Any upfront tariffs would likely get passed on to consumers in the United States weather the demand stays strong or not.
Swaminathan futher explains, “Some countries impose tariffs because they know constrainting supply would set off inflation, while the tariff rate would hurt US demand, which is really unfortunate.” Instead of bringing these foreign goods into the country, America can manufacture domestically, but as Swaminathan points out, it is extremely expensive, even for American companies.
Where Does Trade Deficit Exports Go: US India (About 28 Percent of Trade)
This category is characterized by strategic sectors such as oil/gas and defense equipment for which the US has more interest in capturing than limiting trade. Hence, it is reasonable to expect an increase in US exports which, coupled with India’s commitment to importing more energy, would lower the trade deficit.
What sectors are dual captured (balance) (About 37 Percent of Trade)
These are the sectors that are mostly equally import and export sensitive, such as pearls/precious stones, iron & steel, aluminum, chemicals, and trade within the countries where it is significantly higher.
“While it’s difficult to generalize and call out an entire sector that might be impacted, there are rather specific sophisticated products - such as certain chemicals," Swaminathan added. He also gets a feeling there will be the very subtle impact on jewellery going forward.
“There’s also alumina, where the US doesn’t have a great deal of domestic production. As for any other sector that relies heavily on aluminium as an input does, whether in the form of a manufactured product or a finished product, it will get hurt,” Swaminathan said.
While the United States already applies a 25% tariff on aluminium, Swaminathan assumes that it may not remain like this depending on the extent of aluminum being recycled from the US to India.
In fact, Swaminathan noted, if there are reciprocal tariffs, aluminium exports from India may escape the 25% tariff as India does not place reciprocal tariffs on the US.
Any adverse effects of a US imposed import tariff may be softened for India’s steel industry, if it ever materializes. “The domestic industry can still sell steel within India due to government protections. Irrespective of the global steel price scenario, the Indian government will continue to protect its own businesses,” said Swaminathan.
“The only thing that we need to change is how to control the steel dumping from China into India.” Swaminathan said, “The volume of steel imported from the United States is very low. The major country which is dumping steel in India is China. The Indian government might already be doing something about this while looking at India’s trading policies,” said Swaminathan.
