In This Economy… Trump’s Tariff Wars, RBI’s Test, And Penguin Problems

This past week has been tumultuous for the world and India alike. Markets around the globe and locally plummeted as Donald Trump dug his heels in on the “reciprocal” tariffs he announced last week. Overnight, the US markets briefly felt some buoyancy as rumours of a 90-day pause on the tariffs started to float on the social media platform X (formerly Twitter). The White House was quick to call it “fake news, which then pushed the US indices lower again. The Dow Jones Industrial Index closed nearly 350 points (0.91%) lower on Monday.

Walter Bloomberg (@DeItaone), an X handle unaffiliated with Bloomberg News, posted the rumour to its 8.5 lakh followers, sparking widespread dissemination, which then spread like wildfire. CNBC subsequently repeated the rumour, acknowledging that they were unaware of its source. Reuters then issued a headline citing CNBC. Both of them issued a correction later for carrying the incorrect report.

This actually stemmed from a misunderstanding of a Fox News interview of National Economic Council Director Kevin Hassett, who was asked if any such pause was being considered. Hassett first said “Yep” and then followed it immediately with “The president is going to decide what the president is going to decide.” It was not clear whether the first “Yep” was to the question posed or something else happening on Hassett’s end of the camera.

Trigger-happy newsrooms in times of global market turmoil are the bane of the news business. In the best-case scenario for the newsroom, the rumour may be partially true. At worst, nobody will ever trust the news media again. For the investor, it just means salted wounds.

Is it worth it, then, to risk reputation on such things? Maybe a lesson for newsrooms everywhere.

On to this week’s newsletter, then!

This past week has been tumultuous for the world and India alike. Markets around the globe and locally plummeted as Donald Trump dug his heels in on the “reciprocal” tariffs he announced last week. Overnight, the US markets briefly felt some buoyancy as rumours of a 90-day pause on the tariffs started to float on the social media platform X (formerly Twitter). The White House was quick to call it “fake news, which then pushed the US indices lower again. The Dow Jones Industrial Index closed nearly 350 points (0.91%) lower on Monday.

Walter Bloomberg (@DeItaone), an X handle unaffiliated with Bloomberg News, posted the rumour to its 8.5 lakh followers, sparking widespread dissemination, which then spread like wildfire. CNBC subsequently repeated the rumour, acknowledging that they were unaware of its source. Reuters then issued a headline citing CNBC. Both of them issued a correction later for carrying the incorrect report.

This actually stemmed from a misunderstanding of a Fox News interview of National Economic Council Director Kevin Hassett, who was asked if any such pause was being considered. Hassett first said “Yep” and then followed it immediately with “The president is going to decide what the president is going to decide.” It was not clear whether the first “Yep” was to the question posed or something else happening on Hassett’s end of the camera.

Trigger-happy newsrooms in times of global market turmoil are the bane of the news business. In the best-case scenario for the newsroom, the rumour may be partially true. At worst, nobody will ever trust the news media again. For the investor, it just means salted wounds.

Is it worth it, then, to risk reputation on such things? Maybe a lesson for newsrooms everywhere.

On to this week’s newsletter, then!

India is widely expected to be better placed than most Asian economies in the current tariff era. Yes, the 26% (or is it 27%?) tariff is a pain point. But then other countries have it worse, and a lot of stray commentary has tried to pitch it as a good thing. One could argue that this is the same as being a one-eyed king in the kingdom of the blind.

Richard Yetsenga, group chief economist and head of research at ANZ Group, told NDTV Profit on Tuesday that we should not lose sight of the core problem here. “India may have the biggest lifeboat, but it is still in the middle of the ocean with the rest of us,” he said.

Most experts have referred to the tariffs as “dangerous”. These tariffs have the potential to take the US 100 years back in terms of globalisation from a pure tariffs and trade perspective, Yetsenga said. Being the world’s largest consumer, America could therefore drag everyone else with it. 

So far, India has been clear that it will not join the bandwagon of countries that want to retaliate against the US tariffs. Commerce Minister Piyush Goyal said on Monday that India will stick to “the rules of the game”. In the long run, ethics play an important role, he said at an event in Mumbai. This move will likely protect India against further “reciprocation”, though it will mean that we will have to open up sectors we have been protecting so far. How the domestic manufacturers will react to it is something to watch out for.

In such a weird geopolitical space, India has only one man to look up upto right now. Sanjay Malhotra, Governor, Reserve Bank of India, will deliver his second (and this financial year’s first) monetary policy address tomorrow, with economists expecting another 25-basis-point rate cut.

Alongside this, some expect India’s rate-setting committee to change its monetary policy stance from “neutral” to “accommodative”. This would come at a time when the broader banking system has been facing liquidity tightness, which the central bank has been trying to address through a host of measures. These include open market operations, buy/sell swaps and variable rate repo auctions. A rate cut and a looser monetary policy will aid in easing conditions further.

The market is also seeking a 50-basis-point cut in the cash reserve ratio, which is currently at 4%. This, market participants argue, will be a far more durable liquidity infusion than RBI’s VRR auctions, which are getting difficult to manage.

Will Malhotra deliver what he is expected to? Or will inflation continue to weigh heavily on the monetary policy committee’s mind?

Guess we will find out at 10AM tomorrow.

India’s vibrant car market is set for its slowest growth in five years, Tushar Deep Singh writes.

His second story talks about the Maharashtra government asking some tough questions of Ola Electric.

Our young reporter Agnidev Bhattacharya talks about Zomato’s push for AI in customer service and the human cost of it all.

Tata Capital has finally filed for a $2 billion IPO but has chosen the confidential route.

Corporate tax collection in the first quarter of FY26 will likely slow, sources tell Shrimi Choudhary.

Penguins and uninhabited islands have become victims of Trump’s tariff announcements. Among the places the US has targeted for reciprocal tariffs is Antarctica, with a population of mostly penguins, and the Heard and McDonald Islands in Australia, where no one lives. 

Until next week, this is Vishwanath signing off!