Trade Wars Are Just Beginning, More Turbulence Ahead, Warns Capitalmind's Deepak Shenoy

Trade wars are just the beginning of a deeper economic tussle, and more disruptions are likely, according to Deepak Shenoy, chief executive officer of Capitalmind.

"In the end, it comes down to fiscal realities," Shenoy told NDTV Profit. "The US is the world’s largest services exporter. There are no tariffs on services — in fact, they avoid charging for them as they don't want the rest of the world to start doing the same."

Arup Raha, head of APAC economics at Oxford Economics, echoed the statement. Raha said Trump has always seen tariffs as a legitimate economic instrument because he uses imbalances or deficits without understanding that it is really a savings-investment gap.

"Honestly, I think it's the US that had to blink. While China is hurting, it can take a lot more pain than the US can," Shenoy said.

Being an autocratic economy, China won't allow the impact to be magnified beyond what the government wants. In contrast, the US has a relatively free economy and is open about its struggles, according to Shenoy. "This affects politics too. I don't think this was a victory."

He added that China's import tariffs were largely ineffective. "China doesn't import much from America. It has alternative sources, even if it needs to import. So those tariffs were more symbolic than effective."

Referring to historical trade imbalances, he said: "In the 1960s, during a famine in India, the US placed conditions on wheat exports to us. Today, our trade with the US is mostly in services. In merchandise, we're relatively small players."

Commenting on President Donald Trump's remarks about doing trade with both India and Pakistan, Shenoy said: "It's honestly an uneven game. To hyphenate India and Pakistan in trade terms is very wrong."

On manufacturing ambitions, Shenoy added: "It'll take us a decade to reach where China is today. We want to ramp up manufacturing, but we should focus on making for India first, not the world."

He noted that replicating China or Silicon Valley was not easy. "Those ecosystems have been nurtured for decades. It's hard to build them elsewhere, it will take us some more time."

On Indian markets, Shenoy said: "The bigger hit came when foreign investors pulled out amid geopolitical tensions. This episode isn't a meaningful response — we're inward-facing, less export-dependent. The real impact will emerge in the second half of the year."

"It's going to be a very volatile year for global politics," he added.