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Economic Times
5 days ago
- Business
- Economic Times
Trump's 'shock and awe' tariff tactics won't break Indian resolve: Santosh Rao
"Right now, both sides are pretty entrenched. I expect more negotiations. There's an American delegation coming to India later this month, so discussions are ongoing at the official level. But at some point, perhaps Modi and Trump need to meet—we haven't yet seen executive-level engagement. Maybe that could help cool things down," says Santosh Rao, Manhattan Venture Partners. ADVERTISEMENT The situation seems to be taking an ugly U-turn. From accusing India of having a dead economy, we are now seeing Donald Trump saying he could substantially raise tariffs on India. Do you expect the situation and the dust to settle in the near term, or is it likely to continue for at least the next few days? Santosh Rao: Tempers need to cool. At this point, things are not very favorable. President Trump is unpredictable—he has a habit of doing the "shock and awe" routine, but sometimes he backs off. In this case, however, there's a narrative building that India has been the bad guy—profiting from cheap Russian oil, selling it to Europe, and making money from it. So, the perception is that India is playing the rogue actor in this whole now, both sides are pretty entrenched. I expect more negotiations. There's an American delegation coming to India later this month, so discussions are ongoing at the official level. But at some point, perhaps Modi and Trump need to meet—we haven't yet seen executive-level engagement. Maybe that could help cool things down. But this talk of a 100% tariff, or whatever he decides to impose, is not good for the economy. Still, I don't think India will just give in and accept whatever is thrown at it. There's going to be a lot of back-and-forth. It's unlikely to be resolved in the near term. We haven't heard the last of this—it's going to go on for a few more weeks, if not months. Like you said, India is unlikely to give in. August 7th is the day when tariffs are expected to take effect. What are your expectations, given that negotiations are likely to continue—and as you mentioned, they need to escalate to the top leadership level, with perhaps Trump and Modi engaging directly to reach a trade deal? Santosh Rao: Yes, the tariffs are expected to take effect on August 7th. India has responded with 25% tariffs on a reciprocal basis. On average, the reciprocal tariffs being implemented by the U.S. come to around 15%, up from the 3% that existed globally. So that's a big jump, and the market has largely absorbed it. What we don't know yet is whether Trump will immediately add the 100% on top of that, or if that will happen gradually. I haven't seen any formal language indicating that tariffs will go from 25% to 100% right away, but we still have a few days to go. He might still escalate it. ADVERTISEMENT Just a few hours ago, he posted that he intends to 'slam' India with 100% tariffs because, according to him, India isn't listening and is being stubborn. So, we'll have to wait and see. He's a tough negotiator—applies pressure, pushes people to the edge, presses every button, and then sometimes backs off a bit. That's been his style, and it has brought people to the negotiating table—even the European Union has struck a some point, he's expecting India to do the same. But it's not going to be straightforward. India has a strong domestic constituency to answer to, and its demands in trade negotiations are legitimate, based on the details I've seen. ADVERTISEMENT So yes, more discussions are needed, tempers need to cool, and eventually, one-on-one talks will happen—it's in the best interest of both countries. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
5 days ago
- Business
- Time of India
Trump's 'shock and awe' tariff tactics won't break Indian resolve: Santosh Rao
"Right now, both sides are pretty entrenched. I expect more negotiations. There's an American delegation coming to India later this month, so discussions are ongoing at the official level. But at some point, perhaps Modi and Trump need to meet—we haven't yet seen executive-level engagement. Maybe that could help cool things down," says Santosh Rao, Manhattan Venture Partners . The situation seems to be taking an ugly U-turn. From accusing India of having a dead economy, we are now seeing Donald Trump saying he could substantially raise tariffs on India. Do you expect the situation and the dust to settle in the near term, or is it likely to continue for at least the next few days? Santosh Rao: Tempers need to cool. At this point, things are not very favorable. President Trump is unpredictable—he has a habit of doing the "shock and awe" routine, but sometimes he backs off. In this case, however, there's a narrative building that India has been the bad guy—profiting from cheap Russian oil, selling it to Europe, and making money from it. So, the perception is that India is playing the rogue actor in this whole situation. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Right now, both sides are pretty entrenched. I expect more negotiations. There's an American delegation coming to India later this month, so discussions are ongoing at the official level. But at some point, perhaps Modi and Trump need to meet—we haven't yet seen executive-level engagement. Maybe that could help cool things down. But this talk of a 100% tariff, or whatever he decides to impose, is not good for the economy. Still, I don't think India will just give in and accept whatever is thrown at it. There's going to be a lot of back-and-forth. It's unlikely to be resolved in the near term. We haven't heard the last of this—it's going to go on for a few more weeks, if not months. Like you said, India is unlikely to give in. August 7th is the day when tariffs are expected to take effect. What are your expectations, given that negotiations are likely to continue—and as you mentioned, they need to escalate to the top leadership level, with perhaps Trump and Modi engaging directly to reach a trade deal? Santosh Rao: Yes, the tariffs are expected to take effect on August 7th. India has responded with 25% tariffs on a reciprocal basis. On average, the reciprocal tariffs being implemented by the U.S. come to around 15%, up from the 3% that existed globally. So that's a big jump, and the market has largely absorbed it. Live Events What we don't know yet is whether Trump will immediately add the 100% on top of that, or if that will happen gradually. I haven't seen any formal language indicating that tariffs will go from 25% to 100% right away, but we still have a few days to go. He might still escalate it. Just a few hours ago, he posted that he intends to 'slam' India with 100% tariffs because, according to him, India isn't listening and is being stubborn. So, we'll have to wait and see. He's a tough negotiator—applies pressure, pushes people to the edge, presses every button, and then sometimes backs off a bit. That's been his style, and it has brought people to the negotiating table—even the European Union has struck a deal. At some point, he's expecting India to do the same. But it's not going to be straightforward. India has a strong domestic constituency to answer to, and its demands in trade negotiations are legitimate, based on the details I've seen. So yes, more discussions are needed, tempers need to cool, and eventually, one-on-one talks will happen—it's in the best interest of both countries.
Time of India
16-07-2025
- Business
- Time of India
Markets bracing for tariff-driven price surge: Santosh Rao
"Many companies front-loaded their purchases to beat the tariff deadlines. They stocked up on inventory in advance. But now, that buffer is going to gradually wear off, and we'll start seeing more products imported at higher prices. That's when the inflationary impact will become more noticeable," says Santosh Rao, Manhattan Venture Partners. Speaking first about the inflation numbers—the CPI figures—were you surprised by them, given expectations that the ongoing U.S. tariff policy would lead to rising inflation? Santosh Rao: Yes, in fact, inflation did rise compared to last year. On a month-over-month basis, it was relatively stable. But the bigger issue, or the key takeaway, is that inflation is definitely creeping in. Prices of imported goods have gone up, especially consumer products. So, we're seeing signs of inflation filtering into the market. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Learn The Most Successful Intraday Strategy in Just 2 Hr. thefutureuniversity Learn More Undo Companies had a lot of inventory built up, so they haven't passed on the full cost increase yet. Much of that inventory was purchased at older, lower prices. But as time goes on and that inventory depletes, companies will start passing on more of the higher costs. So yes, inflation was somewhat contained, and it was largely expected. The market anticipated some impact, and we saw that—though not too much, at least for now. Overall, the market is absorbing it. But there was enough evidence for both sides of the debate: those who believe inflation will rise due to tariffs saw signs of it, and those who argue tariffs won't have a major impact also found some comfort because the rise wasn't very sharp. So, it's still unclear which narrative will dominate. But one thing is certain—tariffs are entering the system, and consumers will start to feel the pinch more as we move forward. That could restrain the Fed's actions somewhat. Are you suggesting we're going to see a clear impact of tariff-related inflation on the U.S. economy soon? When might that start reflecting more prominently? Santosh Rao: Yes, exactly. As I mentioned, many companies front-loaded their purchases to beat the tariff deadlines. They stocked up on inventory in advance. But now, that buffer is going to gradually wear off, and we'll start seeing more products imported at higher prices. That's when the inflationary impact will become more noticeable. Live Events So, I believe the next CPI report could show a more pronounced uptick. Tariffs are certainly playing a role—that was expected. There's usually a slight bump when tariffs are introduced. We saw this during President Trump's first term as well: a modest increase in prices followed by a period where prices stabilize at a higher level and markets adjust. It's not likely to be drastic—at least not yet. It all depends on where the final tariff agreements land. Negotiations are ongoing. There are frameworks being discussed, but nothing has been finalized. Especially regarding tariffs on countries like India, Russia, Mexico, and even Brazil—there's been talk of 50% or even 100% tariffs. That's creating some uncertainty in the market. So yes, inflation could go up further, depending on how these developments play out.
Economic Times
16-07-2025
- Business
- Economic Times
Markets bracing for tariff-driven price surge: Santosh Rao
"Many companies front-loaded their purchases to beat the tariff deadlines. They stocked up on inventory in advance. But now, that buffer is going to gradually wear off, and we'll start seeing more products imported at higher prices. That's when the inflationary impact will become more noticeable," says Santosh Rao, Manhattan Venture Partners. ADVERTISEMENT Speaking first about the inflation numbers—the CPI figures—were you surprised by them, given expectations that the ongoing U.S. tariff policy would lead to rising inflation? Santosh Rao: Yes, in fact, inflation did rise compared to last year. On a month-over-month basis, it was relatively stable. But the bigger issue, or the key takeaway, is that inflation is definitely creeping in. Prices of imported goods have gone up, especially consumer products. So, we're seeing signs of inflation filtering into the market. Companies had a lot of inventory built up, so they haven't passed on the full cost increase yet. Much of that inventory was purchased at older, lower prices. But as time goes on and that inventory depletes, companies will start passing on more of the higher costs. So yes, inflation was somewhat contained, and it was largely expected. The market anticipated some impact, and we saw that—though not too much, at least for now. Overall, the market is absorbing it. But there was enough evidence for both sides of the debate: those who believe inflation will rise due to tariffs saw signs of it, and those who argue tariffs won't have a major impact also found some comfort because the rise wasn't very sharp. So, it's still unclear which narrative will dominate. But one thing is certain—tariffs are entering the system, and consumers will start to feel the pinch more as we move forward. That could restrain the Fed's actions somewhat. Are you suggesting we're going to see a clear impact of tariff-related inflation on the U.S. economy soon? When might that start reflecting more prominently? Santosh Rao: Yes, exactly. As I mentioned, many companies front-loaded their purchases to beat the tariff deadlines. They stocked up on inventory in advance. But now, that buffer is going to gradually wear off, and we'll start seeing more products imported at higher prices. That's when the inflationary impact will become more noticeable. So, I believe the next CPI report could show a more pronounced uptick. Tariffs are certainly playing a role—that was expected. There's usually a slight bump when tariffs are introduced. We saw this during President Trump's first term as well: a modest increase in prices followed by a period where prices stabilize at a higher level and markets adjust. ADVERTISEMENT It's not likely to be drastic—at least not yet. It all depends on where the final tariff agreements land. Negotiations are ongoing. There are frameworks being discussed, but nothing has been finalized. Especially regarding tariffs on countries like India, Russia, Mexico, and even Brazil—there's been talk of 50% or even 100% tariffs. That's creating some uncertainty in the market. So yes, inflation could go up further, depending on how these developments play out.
Economic Times
01-07-2025
- Business
- Economic Times
Tariff overhang to delay Fed action; markets await clear catalyst: Santosh Rao
"I am in the camp that believes that two cuts this year is likely. He does not want to get too ahead of the whole inflation scenario. So, he is going to keep it there. Two cuts maybe unless the things get really bad. And that is another argument, if the things get really bad and if he cuts more than two, that means things are really bad and you do not want to give that message. So, two is the right point, later half in the year, that is where we are at this point," says Santosh Rao, Manhattan Venture Partners. ADVERTISEMENT With respect to interest rate environment, especially after US President Donald Trump yesterday again criticized Federal Reserve Chief Jerome Powell, how do you read this development and what does this mean for Fed's next move and back home for India and RBI governor's move as well? Santosh Rao: President Trump making comments about the Fed chair is not unusual. He does that all the time. He does not worry about that. What is really driving the thinking or the market is thinking that the case for cutting rates is getting stronger and stronger. The job market is weakening. We will get the jobs report this Thursday. It is expected to be about 110,000 which is lower than the prior month. Unemployment rate is going to stick up slightly. Inflation is coming down at this point. I mean, there was some little bit here and there, but it is generally soft, so the case for cuts. Now, the only issue is, is it going to be immediately or is it going to be in the later half when the tariffs land and we get certainty as to where the tariffs are landing, I think that is the only thing holding the Fed chair back. So, at this point, the market believes that the case is getting stronger and stronger for rate cuts. I am in the camp that believes that two cuts this year is likely. He does not want to get too ahead of the whole inflation scenario. So, he is going to keep it there. Two cuts maybe unless the things get really bad. And that is another argument, if the things get really bad and if he cuts more than two, that means things are really bad and you do not want to give that message. So, two is the right point, later half in the year, that is where we are at this point. Now talking about the markets, now S&P 500 and Nasdaq, they are both at record levels at this point. Now going forward as we enter the second half of the year, what is your expectation? Do you think the rally could continue especially given that July 9 tariff deadline looms? And also, I mean, is the rally expected to continue or do you think volatility is expected to be back? Santosh Rao: Yes, volatility is the name of the game and it is going to stay that way for a while only because there is so many cross currents. At this point, the market is bumping against all-time highs and in fact, it has crossed all-time highs in some indexes. So, at this point and earnings reports coming out next week and on, are going to show that the earnings growth has slowed down, so that is a concern. I do not see any reason for multiple expansions. So, my bet is that the market is pretty much going to be flat to down going forward. Until much later in the year when the tariff thing is done and then we get a sense of how much tax cuts and what is the new budget and at what shape it takes in the end. ADVERTISEMENT So, at this point, there are more ifs, ands, buts. We do not have any definitive thing, but safe money is betting that it is better to be cautious at this point. Things can get really bad because the economy is slowing down and we need a catalyst to really bump it up and right now I do not see one right there other than lowering interest rates and really spiking up the market in terms of sentiment going forward. If you can tell us, what is your view on emerging markets including countries like India especially in the backdrop of tariff overhang which could probably play out in the first week of July. How do you view emerging markets especially India? Santosh Rao: I mean, the way tariff negotiations are going on, I think President Trump is in no rush. Of course, he has these deadlines and they are very loose-loose deadlines. So, he is going to work around and try to get to a reasonable point. At this point, there are some sticky points here and there from last I read. So, it is going to be an ongoing negotiation. It is going to go way past July 9th, that deadline, I think it is pretty much a given that he is not bound to that number. ADVERTISEMENT But overall, the emerging markets should benefit from the falling dollar, that is a big thing. And falling energy prices, that is great. So, those are big pluses for the emerging markets, so is also for US actually. So, net-net, the tailwind is pretty good for emerging markets. India specifically, they need to sort out the trade deals whatever sticking points there are, but in the end, it will be an amicable settlement because Trump needs to show some development on the tariff side. ADVERTISEMENT He has made so many promises, threatened so many countries. He needs to come up with a good solution. He needs to settle this dispute. If not, he is going to look bad and he has elections coming up next year. So, he wants to pretty much get some wins in his column at this point and he does not have much other than a framework with UK and China and maybe Canada. But other than that, he has not had any specific ones. So, he needs to show that and India if he can come to a good settlement, that will be a big win for him to show that he is doing well, that he is coming true on his word. ADVERTISEMENT
