Trump Retreats On China Tariff; India’s Growth Spark Skips Rural Poor
This week also saw the US economy faltering, gold taking a break from its rising streak and India decided to conduct a caste census.
Donald Trump has celebrated his 100th day in office, claiming the initial one hundred days of his second term to be the best for any US president in history. His supporters, gathered at a rally in Michigan for the occasion, roared their approval. The American economy contracted during the glorious first three months of the Trump presidency, according to US national income data. The world continues to reel in shock and awe.
Canadians have joined China in showing the US president the middle finger. They elected as their next prime minister former central banker Mark Carney, whose chief political plank has been his determination to resist Donald Trump as he tries to break Canada.
Trump Walks Backwards
April 30 was not being celebrated by Trump alone. Vietnam celebrated the 50th anniversary of its victory over the world’s mightiest nation the same day. Goliath has been rampaging again, seeming to have forgotten the lesson the tiny, backward nation had given him with ferocious determination five decades ago. This time, it might be China’s turn to take the slingshot, though.
Trump claimed that the Chinese are negotiating with the US to secure a deal. Beijing clarified that China is not in talks with the US and refused to accept US bullying. If the US wants to talk, it should cease fire, withdraw the tariffs it imposed on China, Chinese spokesmen have made it clear. This shows that Trump wants to back away from the unsustainable position he has taken and is seeking ways to retreat while saving face.
In another step back from Liberation Day rhetoric, Trump has exempted, for two years, automobile parts from the 25% duty he had slapped on them. In two years, the US will have mid-term elections, and the chances are slim, given the dip in Trump’s approval ratings and in consumer confidence, that the tariff-driven plan to make America great again would survive the battering Republicans are likely to receive.
Prices on Shien and Temu, two popular Chinese e-commerce platforms popular in the US have seen prices soar, reports Bloomberg, contradicting the Trump claim that exporters to the US would bear the cost of tariffs. Amazon denied that it plans to indicate the tariff component of the price of the goods it sells.
In The World Of Big Tech
The Tesla board is hunting for a replacement for Elon Musk as its CEO, according to The Wall Street Journal. America’s tech titans have been trying to curry favour with the Trump administration. But Trump has not abandoned the anti-trust investigations and prosecutions initiated by the previous Joe Biden administration against Big Tech.
Google has been charged with having a monopoly in the search business, and is being asked to sell the browser, Chrome. Meta is being sued for its anti-competitive behaviour in buying up potential rivals like Instagram and WhatsApp. American tech giants are being fined in Europe as well.
The charge against Google would, on the face of it, seem outdated. The emergence of ChatGPT, DeepSeek and Meta’s standalone artificial intelligence app, Meta AI, all offer search and seriously compete with Google. Meta’s dominance of social media is again a thing of the past. Trump’s defence secretary, Pete Hegseth, leaked details of planned US attacks on Signal, not Meta-owned WhatsApp. TikTok and YouTube are major competitors to Instagram. As the tech domain changes fast, regulation has to keep pace or face defeat in the courts.
Global Turmoil Continues
As the US economy falters, yields have fallen in the US, weakening the dollar. This has pushed up the Indian rupee and other currencies as well. The Bank of Japan has not followed the European Central Bank and the Bank of England in rate changes: it has paused rate hikes, thanks to Trumpian uncertainty, and reduced growth forecasts for Japan.
Gold has taken a break from its rising streak. But Goldman Sachs maintains its forecast for a sustained climb for gold prices. Oil prices have tumbled, on account of both slowing demand in a slowing world and retrenchment of production cuts by the oil cartel, OPEC.
Meanwhile In India
The Indian economy gives out signals of growth revival, but the growth would appear to have skipped the bottom of the pyramid. Fast-moving consumer good sales continue to be slow in rural areas. But the more premium goods have seen some brisk action, ranging from liquid detergent (hoi polloi use powder) to sports utility vehicles and luxury cars. Direct tax collections and GST collections continue to climb new heights, suggesting that economic activity is robust among the well-off.
India’s markets have seen the return of foreign portfolio investors, and the markets continue to recover. Company results sustain the momentum, for the most part. Remarkably, the Indian markets have not seen India-Pak conflict as a major risk factor, even as the markets have tanked in Pakistan.
India has seen the emergence of online betting markets that have managed to pass themselves off as financial markets, even if such a charge probably cannot be pinned on them. Market regulator, the Securities and Exchange Board of India, has clarified that these so-called opinion markets do not have entities it regulates. This raises the question as to who would regulate these pure betting markets.
Arguably, there is a case for allowing betting as a form of entertainment. Right now, India bans betting per se and permits only those forms of betting in which skill plays a preponderant role, even if chance is a significant element in the determination of the outcome on which bets are placed. Gambling can be addictive and damaging to personal finances of the vulnerable, who could also be drawn to the charms of the so-called prediction market. The market would call for both self-regulation and regulation.
The government has decided to conduct caste enumeration along with the next population census. This takes away from the Opposition the only plank it has had for long, but is bound to open a fresh Pandora’s box of quota demands, and attendant social competition. Fighting for a larger slice of the pie provides a useful distraction from the more useful question as to why the pie is not growing fast enough to satisfy all.
