“The capital may move on the American assets”: Sanbib Sabharwal explains how the trauma of customs tariffs can create an opportunity for India

Since the world is highlighting the new customs tariff imposed by the United States, the Sandip Sabharwal market has described this step as a “highly dangerous maneuver” designed to address the enlarged twin deficit in America. While the effect on global trade and inflation is already feeling, sabharwal believes that India may be in a unique position to benefit from it – if its cards are played properly.

He said in a detailed blog: “Once dust settles, the capital may start to shift from American assets. Emerging markets with low exposure to American trade – regarding GDP – can benefit from them,” he said in a detailed blog.

Sabharwal wrote that the primary goal of the customs tariff plan is to address the financial and commercial deficit in the United States. “The federal government debt is now $ 36 trillion, which highlights 130 % of GDP,” and indicated that the interest payments alone may touch $ 1.6 trillion annually. “It is clear that this is not sustainable.”

On the trade front, the United States runs a deficit of $ 1.4 trillion. “In theory, a 25 % tariff can be exported 500 billion dollars. But with the collapse of demand and exemptions, real revenue gains may be only 200-300 billion dollars,” Spoharwall wrote.

The economist indicated that although this step may enhance the production of “Made In America” ​​in the long run, the immediate cost will be borne by consumers. “Even if manufacturing returns, the consumer will bear the burden through high prices,” especially since inflation after inflation has already pressured the family budgets.

Sabharwal warned that revenge had already begun, as China slapped 34 % on US -sensitive US goods such as soy and corn beans. “To make up for this, the United States government may resort to support, which increases export and growth volumes.”

For India, however, the doors can open. “Through its local economy to a large extent, this may be an opportunity,” he wrote, which indicates that RBI and the government “launch aggressive expansion policies” to stimulate growth while weakening the global environment. He added: “The weakness of the rupee is less than anxiety, given the relative decline of the dollar.”

In the markets, Sabharwal expects that TECH will suffer as financial statements, capital goods and cars can excel, provided that “supportive policies” are present. In the long run, he said: “The capital may start to shift from American assets,” which provides a possible batch of emerging markets such as India.