Himanshu Shah, founder of Shah Capital, a global investment firm, thinks the new U.S. administration “is unpredictable and not good for business”
| Photo Credit: VIPIN CHANDRAN
India can find opportunities in the global supply chain economy which is being disrupted by U.S. President Donald Trump’s aggressive tariff policy, according to Arun M. Kumar, former U.S. Assistant Secretary of Commerce in the Barack Obama administration.
Mr. Kumar said Prime Minister Narendra Modi’s recent visit to the U.S. was a success in terms of reinforcing bilateral ties on multiple fronts, and India should now focus on the details of the proposed trade agreement between the two countries. “…it is a moment that should be dealt with great, deep thought and great intentionality of what needs to be achieved,” Mr. Kumar said.
Himanshu Shah, founder of Shah Capital, a global investment firm based in Raleigh, North Carolina, which manages $600 million in assets, thinks the new U.S. administration “is unpredictable and not good for business”, but India may not face a severe blow. “India has geopolitical advantages. Hence, tariffs won’t be as bad as is being feared,” Mr. Shah said.
Mr. Kumar said it was difficult to understand the rational basis for the decisions of the Trump administration on tariffs, and one had to wait for them play out. Mr. Kumar and Mr. Shah were speaking to The Hindu on the sidelines of a global conference organised by Indiaspora, a forum of people of Indian origin from around the world.
“We will be entering an era of great uncertainty for multiple reasons. President Trump has always stated he prefers bilateral agreements rather than multilateral agreements. We are going into a season where there will be a lot more aggression from the United States in terms of tariffs. Now, part of it is justifiable, because it is true that U.S. tariffs are much lower than the tariffs of many other countries. So it probably can lead to appropriate correction, because in today’s world, lower tariffs can be helpful to all parties,” Mr. Kumar said.
He noted that U.S. aggression against Mexico and Canada betrayed a possible lack of thinking behind the actions of the Trump administration. “It’s very difficult to understand what the rational basis of those positions are. After all, the U.S., including under the previous Trump administration, had expanded trade with these two countries.” Mr. Kumar believes that the pressure to bring down tariffs will help India’s ambition to be part of the global supply chain. “The Apple example is splendid. India is squarely in the middle of the global value chain for making iPhones, and it’s going to create 1,00,000 or more jobs in India,” he said.
According to Mr. Kumar, the idea that countries can have self-contained economic systems insulated from global trade is not feasible in the current world. “…because even simple products today have components that come from multiple countries, go through various stages of processing in multiple countries, and that’s very true of all complex products… So what the U.S. and many other countries actually are trying to do is, in many ways, self-limiting, if not self-destructive. I think it’s going to be very costly for any economy that decides that they’re going to build everything themselves,” said Mr. Kumar.
He believes that India, as supplier of migrants to the U.S., should take measures to curtail illegal immigration, which is an an area of severe concern for the Trump administration. “The Prime Minister made a very pertinent comment on this in the White House press conference when he said that there needs to be a focus on preventing trafficking of people.
Mr. Shah expects migration into the U.S. to be down by as much as a third of current levels and also a decline in U.S. investments abroad. “Outbound U.S. investment will potentially be down by at least 20% in the first two years. There is a distinct possibility that Indian companies may invest more in the U.S., especially conglomerates and pharmaceuticals,” he said.
Published – March 04, 2025 09:27 pm IST