MARKET PERSPECTIVE

By J Mulraj

Aug 9-15, 2025

Trump’s aggressive tariffs will damage America

Image created by Chat GPT

Trump is trying, in the wake of an unsustainably high debt level of $37 trillion, to reduce it by arm twisting other countries into paying high tariffs and into making investments in USA. His imperiousness is, in fact, driving away the erstwhile allies of America, like Canada, one by one. It reminds one of the verse in the Agatha Christie book ‘Ten Little Niggers’; in this case:

Ten Big Leaders

Ten big leaders stood in a line,
Trump tariffed China and then there were nine.

Nine big leaders stood at the gate,
Trump asked for a piece of Canada and then there were eight.

Eight big leaders were hoping for heaven,
Trump sanction Russia and then there were seven.

Seven big leaders trying to get clicks,
Trump tried a squeeze on EU and then there were six.

Six big leaders attempting to jive,
Trump whacked Brazil and then there were five.

Five big leaders knocking on the door,
Trump served Japan a lemon and then there were four.

Four big leaders praying trade would be free,
Trump stabbed India and then there were three.

Among countries who are pushing back on such unilateral and punitive tariffs are Canada, Brazil, India and, of course, China. Trump is unable to pressure China, because of it’s chokehold over rare earth minerals, and it’s huge manufacturing capability (which America outsourced after globalisation, in an attempt to boost shareholder returns, never mind the long term vulnerability that would create). So it has agreed to a 90 day pause in it’s tariff war.

China has offered the continent of Africa duty free access to China, and has launched a payment system to replace the US $ system.

Canada introduced retaliatory tariffs, it’s people boycotted American products like whiskey, and reduced tourism to USA, which has affected a lot of small border towns in America.

Switzerland and Spain, both hit with high tariffs they didn’t expect, are reconsidering purchase of F-35 stealth fighter aircraft. Partly due to the aggressive tariff rate, but also due to the fact that a British owned, American made, F-35 fighter plane was recently grounded in Japan, a few months after another was grounded in Trivandrum, India, in June. This indicates a manufacturing or maintenance flaw.

Perhaps Mr Trump would do himself a favour by reading about the Boston Tea Party. In 1773, the 13 colonies forming USA, were governed by the British Parliament. The colonists demanded more powers to self rule themselves. The Townsend Acts, which imposed duties, or tariffs, on imports of goods by the colonists from Britain, were scrapped. But a Tea Act was introduced to raise money for the East India Company through a tariff on tea imported by the colonists. They protested by dumping the tea in the water, and this rebellion was called The Boston Tea party (it was a protest about,the tax on tea remained).

So, Mr Trump, Americans rebelled against high tariffs 252 years ago; why wouldn’t other countries follow that example and protest against your absurd tariffs now? Soon USA will have few allies.

And then there were none!

What USA will have is technological innovation, thanks to it’s having the largest pool of capital and a vibrant ecosystem to fund startups. Only 5 companies in the world ( Alphabet, Amazon, Apple, Microsoft, Nvidia) have a market cap exceeding $1 trillion, and all are American. By virtue of their size, these companies have the risk appetite, as well as access to funding, to invest in the next waves of technologies, which they do. America, eg, leads in technologies like AI, autonomous vehicles, humanoid robots, and quantum computing. In China, the State focuses on select sectors, investing heavily with companies to promote innovation in those sectors.

America’s future is in technological innovation. But it’s leaders need to focus on solving their own problems, like high debt, $37 trillion, poor infrastructure and outsourced supply chains (largely due to shareholder pressure for improved quarterly performance which shortens managerial vision to the near term rather than the long term).

Of the $37 trillion official US debt, Obama added $ 7.6 t., Biden added $ 8.4 t., Trump added $ 7.8 t, in his first term. So, 64% of it’s debt was added only by the last 3 presidents, in the last 12 years. Trump should stop propagating the myth that other countries have been “ripping off” the US, and start accepting that he, himself, has contributed over a fifth of it! The US spent $2 trillion in the Afghan war and $2 t. in the Iraq war, with nothing to show for it. Instead of stopping the Ukraine war, as he vowed to do in a day, Trump continued to financially and militarily fund it.

So don’t blame others, Mr Trump! Introspect, instead. You will find answers as well as peace!

Who pays for the tariff hikes?

In the case of fresh vegetables, it is American consumers who do. About 35% of fresh vegetables consumed in USA are imported from, mainly, Mexico (69%) and Canada (20%). In July fresh vegetable prices were up 39% in July!

Last week the BSE Sensex closed at 80597 for a weekly gain of 740 points.

On Friday, Presidents Putin and Trump met in Anchorage, Alaska. One hopes they will be able to throw an anchor on the Ukrainian ship of war. That’s what the summit is called for. Putin’s demands include Russia holding on to captured territory (Zelenskyy says, after losing the war, that his Constitution forbids it) and that Ukraine not be granted membership to NATO, which was the trigger for the war.

Trump, as expected, issued threats of high consequences for Putin if he doesn’t end the war. In an act that can only be described as sheer lunacy, he has despatched 2 Ohio class nuclear submarines to near Russia’s borders. These carry combined nuclear fire power to destroy 90000 Hiroshimas! If this is not lunacy what is?

Russia has a system called ‘dead hand’ which allows it to automatically retaliate against an enemy even if it’s entire leadership has been wiped out in a first strike.

In good news for India, the Geological Survey has discovered a large gold deposit in Jabalpur. Should Trump’s jingoistic rhetoric reach a crescendo (it’s hard imagining Trump as a tenor) gold will be even more valuable.

India should use the hostile tariffs launched by Trump to clean up it’s act. It has a lot to clean up, starting with an ineffective investigative system (since 2015 the Enforcement Directorate has convicted only 15/5892 cases filed), a lethargic judicial system (53 million pending cases) and continuing bureaucratic interference, which allows corruption at State levels to flourish.

At the time of submitting this column there is no news on the Putin-Trump Alaska meeting. One can only hope that the war that ought never to have started, ends.

Comments may be sent to jmulraj@asiaconverge.com