1 Like
Often, we believe that big governments act with deep thinking and sound judgment—but sometimes, their decisions seem random and thoughtless.
The recent tariff exemptions granted by the Trump administration for electronics such as smartphones, laptops, and other tech products from China impact approximately 22% of U.S. imports from China. They still remain subject to a prior 20% tariff specific to Chinese imports
One thing seems sure - USA seems won’t impose any tariff on pharmacutical - just my opinion.
The Madman Theory (Book name) is about deliberately acting irrational and unpredictable in order to create fear. The idea is to leave the opponent confused and without enough time to think or respond calmly.
In the past, Nixon followed this approach, and more recently, Trump seems to have done the same. However, this strategy doesn’t always work.
8 Likes
So when you export to US, tariffs come into play. What about a situation where you have an indian company in US and manufacture there. Will it be called export?
From US point of view, Apple is an American company. If they make their products in India and import to US, will the tariffs be applicable?
Apple will be indirectly affected due to the distributed supply chain where their parts will attract tariffs which will force phones cost to go up..Just look at the latest - Phones, Laptops etc have been spared…things continue to evolve since these were announced without giving people to understand the impact to the world
There have been many occasions in the past where governments of large countries (both in population and economy) have made logically incompetent decisions only to realize after few years that, those were useless decisions.
It has led to lot of pain for large middle class and lower middle class population at the cost of thriving rich people and has resulted into Top 10% population holding about 75% wealth. Remaining 90% population is left with below par income or remains satisfied with 12%-13% CAGR returns while Rich are growing their wealth 2X-3X-4X after every 2-3 years.
In current scenario I personally believe that, we will witness more such incompetent decisions with lot of justifications floating around on Internet, only to realize after few years that, those were actually not so useful decisions.
Coming to the current scenario, when USA increased tariffs 100 years back, they went into deep recession and markets were in trouble and mostly history does not repeat but it always have similar patterns with some minor differences.
“In the past, Nixon followed this approach, and more recently, Trump seems to have done the same. However, this strategy doesn’t always work.” This line summarizes it all!!!
Let us see what happens in next six to twelve months!!
5 Likes
Yes, tariffs will be applicable since Trump wants to bring manufacturing back into the US.
I have no axe to grind against Donald Trump in general, but his tariffs announcement were met with a meltdown in the bond market. Bond markets forced him to pause, because it is simply not possible to alter global supply chains at the whim and fancy of any individual. America created the China of today, and to decouple requires serious introspection on the part of Americans, which is simply lacking. Tariffs are crude, and high tariffs never really deliver anything except corruption and smuggling. Not to long ago, I remember each import into India was accompanied by a 100 page file with various permissions, and what not. Tariffs are a fundamental pillar of the license raj, in which industrialists grovel before bureacrats and politicians, asking for exemptions or imposing duties on competing products. One Mr Ambani used this wisely, when he imported an entire manufacturing plant in parts and assembled it in India because importing an entire plant as a whole carried more duties.
This is the essence of high tariffs - a crude measure used by politicians to justify exactly what Donald Trump is saying. Tariffs cannot replace sound industrial policy. Say what you want, but the Chinese have excelled in industrial policy. Hence, they are the factory of the world. It’s about time that India understands that the Chinese government was determined to industrialise China, something that is sorely lacking in our national narrative.
Lastly, Chinese goods will find their way to the US for a long time to come, even with tariffs. There is no escaping the hard reality. Unless one believes blindly in Donald Trump, that is..
5 Likes
It’s same in India and the USA.
For example, Hyundai manufactures cars in India, so no additional tariffs apply when they sell those cars within India. However, even though Tata is an Indian company, if they want to sell Jaguar cars made in China to the Indian market, import tariffs will apply.
Similarly, for made in India products of apple, tariffs will still apply when they are sold in the USA.
3 Likes
I want to express my heartfelt thanks to everyone who has engaged with the previous posts. The thoughtful insights, diverse perspectives, and meaningful discussions that followed have enriched the conversation far beyond what I had originally intended. This exchange of ideas is what truly gives value to platforms like this—where the goal is not just to follow the news, but to understand the deeper forces shaping our world.
Several key developments have unfolded since my last post, and they seem to indicate that the U.S. administration may have entered this tariff battle without fully evaluating the long-term implications and trade-offs. One thing is certain—these actions closely follow the strong rhetoric Trump used during his election campaign.
These moves, while appearing inconsistent on the surface, reflect a clear underlying pattern: apply pressure, offer temporary relief, observe reactions, and recalibrate when necessary.
U.S. tariffs were initially announced with aggressive intent, but we’ve since seen a 90-day negotiation pause, the implementation of a base 10% tariff, and selective relief on electronics and consumer goods, etc . These quiet adjustments suggest that while the original intention may have been bold, the reality of execution is proving far more complex and costly—potentially turning a strong trade posture into a strategic burden.
One advantage the U.S. still holds is its powerful consumer base—backed by the world’s largest economy (~$30 trillion)—which gives it significant leverage in any negotiation. This may continue to be its most valuable asset in the unfolding economic chessboard.
There are several areas where the current tariff structure deserves deeper examination—like the broader U.S.–China trade tussle, the impact on inflation and bond yields, devaluation pressure on the U.S. dollar, shifts in U.S. consumer behaviour, stock market volatility, the automobile sector’s paradigm shift, etc . But for this post, let’s focus on a sector that quietly carries massive economic and political weight: “Decoding the Relaxation on Electronic Goods Tariffs.”
The electronic goods sector is more than just devices—it’s a pillar of the U.S. economy, especially through major tech players like the FAANG companies. Smartphones, laptops, and digital devices may seem like routine items—but they are deeply linked to global manufacturing chains, corporate margins, retail pricing, and geopolitical influence.
So when the Trump administration relaxed tariffs on these goods, it wasn’t just about short-term relief. It was a calculated move with multiple strategic objectives.
Let’s first look at where the U.S. stands in terms of electronics dependence on China
- Smartphones: 73% of total imports from China ($41B out of $56B)
- Laptops : 66% ($32B out of $49B)
- Lithium-ion batteries : 70% ($16B out of $22B)
- PC monitors, game consoles, and toys : Each with over 75% dependency
This data (U.S. International Trade Commission, 2024) clearly shows that the U.S. is highly dependent on China for critical electronic items. In total, these segments account for tens of billions of dollars in imports, much of which is tied directly to U.S. consumer demand and tech supply chains.
In a broader sense, the decision to spare electronic goods from harsh tariffs reveals the strategic tightrope the U.S. is walking. While the goal may be to reduce dependence on China and reshape global supply chains, the reality is that some sectors—especially electronics—remain too integrated and too critical to disrupt abruptly.
The electronics space isn’t just about gadgets—it reflects consumer behaviour, corporate health, inflation control, and even currency dynamics. For now, tariff leniency in this space appears to be a calculated compromise, allowing the U.S. to protect its internal ecosystem while maintaining pressure on China.
At the same time, one thing is becoming increasingly clear—U.S. manufacturing is entering a revival phase, particularly in high-value sectors like AI infrastructure, semiconductors, and clean tech. Major announcements like NVIDIA’s $500 billion commitment to AI infrastructure signal that the U.S. intends not just to negotiate, but to rebuild its industrial base in parallel.
How long this compromise lasts will likely depend on how quickly alternative supply chains evolve—and how the next phase of the U.S.–China relationship unfolds.
This post only scratches the surface of a much broader transformation. There are several areas that deserve deep exploration—such as the broader U.S.–China trade tussle, the impact on inflation and bond yields, devaluation pressure on the U.S. dollar, stock market volatility, shifts in U.S. consumer behaviour, and the automobile sector’s paradigm shift.
Additionally, sectors like pharma, EVs, and themes like rare earth material control offer rich ground for deeper analysis within this evolving framework.
Let’s continue this dialogue and deepen our collective understanding of the forces reshaping the global economic order.
3 Likes
Great post sir, it’s clearly understandable that Trump is using the tariff scenario as a deterrent by capitalising on its Largest Country on the basis of economy.
Looking at the dependence on manufacturing, if US has to develop its manufacturing capability it just seems a long way to go in the sectors you mentioned.
Looking at this, his focus might also be on unemployment rates in US too.
2 Likes