MARKET PERSPECTIVE

By J Mulraj

Sep 13 – 19, 2025

He twiddles whilst America burns

Image created by ChatGPT

President Trump’s aggressive tariff policies seek to extract benefits for America, and drive inward direct investment to create jobs. But his policies are unfairly one-sided and are destroying America’s goodwill.

America is in decline, with red flags everywhere. This is due to historical reasons, as well as Trump flexing US muscle in trying to extract tariff ‘payoffs’ from both allies and adversaries. This is compounded by ham-handed actions by Government agencies.

In 2025 South Korea signed a trade deal with Trump, which was one-sided. Whilst Korea had to pay a 15% tariff on exports (25% was threatened) it was to offer duty free access to its market for US products. Besides, Korea was to buy $ 100 m of US energy products and invest $ 350 b in USA.

One of these investments was by the South Korean chaebol, Hyundai, to establishing collaboration with LG, an EV battery plant in Georgia. Hyundai workers, involved in constructing the plant and in training US workers to run it, were suddenly raided by ICE (US Immigration and Customs Enforcement), and over 300 Korean workers were held, for upto a week, handcuffed and held in detention. The charge related to unlawful employment practices and visa violations, perhaps by contractors hired for the purpose. The workers have returned, but this mishandling by ICE has set back US-Korea relationship, which is now on, hmmmm…, ice!

ICE could and should have conducted the investigation quietly and with the courtesy extended to someone trying to help USA by investing and imparting operational skills. Korea is investigating human right abuses to their citizens by ICE.

The impact will be longer lasting, because those officers selected to train the Americans would be unlikely to return to USA and there may not be many others, unaffected by the trauma of incarceration, to offer. Other countries would also be wary of investing in USA if their citizens were similarly treated.

Trump’s aggressive stance has ruined deep ties with Canada, Switzerland, Japan, EU and, of course, China. This has had negative impacts on American exports like soybeans; China now buys it from Brazil. Soybeans was the largest US agri export. Canada and China have cancelled their orders to buy F-35 stealth fighter jets from USA. After the recent attack by Israel on Qatar, targeting Hamas leaders, it is asking for renewed defence ties with USA . Saudi Arabia has, after the attack, signed a defence pact with Pakistan.

Incoming tourist arrivals to USA have dropped by 25% from Canada and 17% from Western Europe, impacting airlines, hospitality and tourist related service sectors.

America has, unwisely, concentrated it’s ports infrastructure, making its economy very vulnerable to shocks. These are LA and Long Beach, which account for 40% of international trade. Should there be any disruption, as happened during Covid, supermarket shelves will start emptying and manufacturing will be hit by shortage of raw materials and parts.

Morgan Stanley, one of the top 5 US Investment banks, has raised 5 year funds, issuing panda bonds at a coupon rate of 1.98%. This is lower than what it would need to pay to raise funds in the American market, in USD. This poses a threat for the USD. The Fed lowered interest rates by 0.25% last week, in view of rising unemployment.

All in all, under Trump’s aggressive policies he has distanced USA from its allies, hurt export prospects for its products and services, and has increased, instead of trying to reduce, its humongous $ 37 + trillion debt. Of this, $ 9 trillion is due for repayment this year. It will have to be rolled over, and investors would demand a higher coupon rate.

Elon Musk says that the only way out is to significantly raise productivity, which can happen with the advent of humanoid robots, which Tesla will start offering by 2026.

India is making inroads into task oriented humanoid robots, such as Vyommitra (friend of space) developed by ISRO, one being developed by DRDO for military missions and a few in the private sector, including a humanoid robot being developed by Addverb Technologies, a firm backed by Mukesh Ambani.

In India news, the Government expects the recent cuts in GST (Goods and Service Tax) to lead to a consumption boos of ₹ 2 trillion. That’s welcome news.

India under PM Modi, who just completed 75 years, has several achievements to its credit. Yet, a lot more needs to be done.

Physical Infrastructure of some cities is pitiful. Bengaluru, the IT/startup capital, has such awful, pothole filled roads that a startup, Blackbuck, is threatening to relocate. And, instead of resolving this long standing infrastructure weakness, Deputy CM D. K. Shivkumar says that ‘blackmailing a Government will not help’. A woefully inadequate and irresponsible response to a genuine concern that holds economic growth back. There ought to be a forum through which genuine grievances can be addressed.

No Investor Protection The continuing ability of scamsters to propose Ponzi schemes and get away without punishment is a sad commentary on this Government. The investigative agencies like ED, PMLA, others, do little to help victims after seizing assets of a handful of perpetrators. They take no action to liquidate these assets and recompense victims, nor do they seem to care. The judiciary is even less helpful towards victims. Even when a settlement is reached between the perpetrator (NSEL) and its victims, there are inexplicable delays. Why?

And now SEBI has just proposed allowing more FPI (foreign portfolio investors) to invest in multi commodity exchanges. Well, Mr Tuhin Kanta Pandey, Chairman, SEBi, do you not think it fit to first ensure full compensation for victims of NSEL first? After all, its founder parent, FTIL, had been under your supervision, was it not?
Again, unless PM Modi hauls up the investigative agencies and the judiciary to bring in true investor protection, not just lip service as everyone has been doing, you cannot expect India to become a developed country.

Unending Corruption aided by tax laws The two issues mentioned above are likely rooted in corruption, else why should they persist? Tax laws, providing full income tax exemption for farmers. This is misused by the corrupt, to launder their bribe money, claiming it to be farm income. Politicians seem to want a perpetuation of the system by stating that agriculture is a State subject so requiring a consensus of all States.

But, hey, that did not prevent the Centre in introducing GST, when several indirect taxes were also under the purview of States, did it?
Medical science has made several strides but it is not yet possible to replace a human backbone. The polity must learn to be able to demonstrate a strong backbone and reform the tax exemption to farm income, in order to make a big dent on corruption.

To show sympathy to small farmers toiling in the fields to feed us all, the Government can allow them a tax exemption upto, say, an annual income of ₹ 36 lacs/year, and then to be subject to normal tax rates.
Will the polity have the moral strength and the spinal presence to do that, for ushering in a morally stronger country?

Last week the BSE Sensex ended at 82626, for a weekly gain of 722 points.

America may be in decline. But India can rise, both economically and in dignity and stature, if it tackles its underlying weaknesses at the roots.

The citizens demand public service, not lip service.

Comments may be sent to jmulraj@asiaconverge.com