'If Global Bond Yields Rise, India Won't Be Able To...': Jim O'Neil's Big Warning On Tariffs

Global markets are bracing for a potential economic fallout ahead of the looming Aug. 1 deadline of US President Donald Trump's new tariff announcements. Amid the impact of tariffs announced with certain countries including Japan, South Korea, Indonesia, and others, policymakers and economists worry that the US economy has started to show signs of concerns.

Amid the backdrop of the tariff-impact, top British economist Jim O'Neil, who is also the former Commercial Secretary to UK Treasury, spoke to NDTV Profit in an exclusive interview, giving a stern warning that if global bond yields rise consistently due to US tariffs, it will be 'very hard' for 'any market' to resist the consequences, including India. O'Neil also claims that the US and UK inflation data reveals tariffs are passing on to consumer prices.

O'Neil—best known for coining 'BRIC', the acronym that stands for Brazil, Russia, India, and China, told NDTV Profit, that the latest US consumer price index (CPI) data gives the 'first hint' of passing tariff impact to consumers.

"US and UK inflation CPI data were higher than expected. Tariffs have started coming from import prices to consumer prices. Markets are seeing a new phase because of tariffs," said O'Neil on the economic data.

US consumer prices rose 0.3% in June, a roughly 3.5% annual rate, after a 0.1% increase in May. The data revealed that US inflation accelerated to a five-month high in June at 2.7% year-on-year, compared to 2.4% in May.

The former chairman of Goldman Sachs Asset Management has warned that global markets, including India may not be able to fully resist the consequences of US tariff-impact. "If inflation persists, bond markets will begin to get volatile, which won't be good for global financial conditions."

Amid the sweeping tariffs announced on Asian countries, the top economist highlighted that Japanese investors have been "one of the largest accumulators of foreign assets" for a long time. "If Japanese bond yields keep rising, it will have its own negative consequences," said O'Neil.

According to the former Goldman Sachs expert, India still 'stands out' among the emerging markets (EM) group. However, he maintained that if there is a ''sustained rise'' in global bond yields, it will be "very hard for anywhere", including Indian markets, to resist the consequences of that.

MSCI's global equities index lost ground after touching a record high, while US Treasury yields hit their highest level in more than a month on Tuesday, after investors digested the rise in US inflation and took a mixed view of quarterly results from big banks.