In an interaction with ETNow, Jigar Mistry of Buoyant Capital, outlined a more complex picture of the ongoing trade reshuffle. While India appears relatively insulated for now, he warned of potential spillovers from China’s trade displacement.
“If China is not allowed to export into the US, then it will try and flood every other market that it is allowed to export to,” Mistry said, pointing to historical precedent. He added, “We have seen this story play out with steel in the year 2015 to 2018 onwards, where they started supplying to the Philippines, Thailand, and the Asia-Pac region… even within India, China could start dumping a lot of material.”
While some market participants view India as a beneficiary of the US tariff pause, Mistry cautioned against oversimplifying the impact. He acknowledged a “first order advantage”, stating, “If the duty on India is less than the duty on every other country, that is a relative benefit to India.” However, he pointed out that the direct gain may be limited, given that “India exports to the US a very small percentage of its GDP and therefore there is no direct impact in and of itself.”
More importantly, Mistry emphasized the second- and third-order effects that could challenge India’s macro outlook. He noted that crude oil and the dollar have weakened due to implied global slowdown fears. “We cannot have it both ways in a way that the recession will happen, which is why crude will fall but India’s exports will not get impacted,” he said.
Looking back at how the tariff scenario unfolded, Mistry explained that it could have either been a tactical pressure tool or a structural shift in global trade. “One was that the Trump administration was just using this as a tactical manoeuvring tool… The other way it could have played out was the fact that they would have completely changed the face of how the global business is done,” he said.In conclusion, Mistry summed up the situation by saying, “It is a little more nuanced situation that we have been presented with… it is one of those times where you need to take a calibrated and balanced call.”Also read: Jefferies’ Chris Wood raises India bet at the cost of Taiwan amid Trump tariff turmoil(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
