"Sometimes it seems ...": Nadir Godrej on Trump's rates, India Impact

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Much of the headlines from Donald Trump's second term as US President has been around deportation and tariffs, with India feeling the pinch on both counts. Over 300 Indians living illegally in that country have been flown back - shackled - on American military aircraft, so far. And then there are the tariffs.


The impact of tariffs on India - 25 per cent on steel and aluminium, and the reciprocal tariffs announced last week, hours before Trump met Prime Minister Narendra Modi - will play out over the next weeks.


But the effect may not be too bad, Godrej Industries' Managing Director, Nadir Godrej, told News Agency.


Speaking at an News Agency Profit event, Mr Godrej pointed to the US President's apparent tactic when in confrontation mode - threaten tariffs to force a settlement, as he did with Colombia's Gustavo Petro when the South American nation refused to accept illegal immigrants.


"It (the tariffs) won't impact our business too much... although we do export to America, it is not a very large percentage of our business. It may certainly impact other Indian business..."


"But sometimes it looks like Donald Trump talks a lot, and then quickly withdraws. He delayed his tariffs on Canada and Mexico... of course, only for a month, so let us see what happens."


"But probably he looks for some quick transaction (from the country on which he is imposing tariffs) and lets them off the hook. I hope that is what is going to happen (with India)," he remarked.

Trump And Reciprocal Tariffs

The US President believes 'reciprocal tariffs' are an easy way to counter taxes imposed by other nations - including India, whom he called "a very big abuser" - on American products.

EXPLAINED | 

What Are Reciprocal Tariffs And Who Might Be Affected?


He believes an 'eye-for-an-eye' tactic will either force lower tariffs all-round or boost a stuttering domestic manufacturing sector by incentivising foreign companies to open factories in the US.


The US did see a bump in manufacturing employment as a result of tax cuts in Trump's first term, but things changed after he introduced the steel and aluminium tariffs in March 2018.


Since re-assuming office on January 20, Trump has re-ordered tariffs - on all Chinese goods and two separate levies on imports from Canada and Mexico, his two largest trading partners.


The latter levies include 25 per cent taxes on steel and aluminium.


India is not a particularly large supplier of steel to the US (America's largest is Canada), but it is one of the world's largest primary producers of aluminium and America is its top export market. And news of the steel and aluminium tax sparked a 1,038-point meltdown in the Indian stock market.


However, at least in the case of Canada and Mexico, Trump paused the tariffs almost as soon as he ordered them. In return, Ottawa promised to crack down on the flow of fentanyl, a deadly narcotic, across the Canada-US border, and Mexico City said it would try to control migration.


No such concession was made for China.


Japan, it is understood, has sought an exemption from the steel and aluminium tax.

Can Bourbon "Buy Us Peace?"

Mr Godrej seemed to be referring to that trade-off, and chuckled that New Delhi's move to slash taxes on bourbon whiskey - from 150 per cent to 50 per cent - might "buy us some peace", particularly since the new tariff is now only half that imposed on the same product from other importing nations.

READ | 

US' Bourbon Whiskey Gets Sweet Deal As India Slashes Tariffs


India has also reduced duties on other American products, including the iconic Harley-Davidson motorcycles, a point Trump noted in comments to the press after meeting Mr Modi. He recalled how "Harley Davidson couldn't sell their motorbikes in India because the tariff was so high".

READ | 

Amid Tariff Threats, India Cuts Import Duty On Iconic US Bikes, Cars


However, Finance Minister Nirmala Sitharaman has said these reductions had nothing to do with any brewing tariff war with the US. "We are looking to strengthen the foundation of the Indian economy," she told News Agency this month in an exclusive post-Union Budget 2025 interview.


On a more serious note, the industrialist also underlined "the need to stand up to these kinds of tactics (the threat of tariffs) and find good strategies (to counter).

Limited Impact On India?

A report by the State Bank of India suggests the actual impact of America's tarrifs may be limited.


The report indicated that even if Trump were to order higher-than-expected tariffs, i.e., by 20 per cent, or more, the overall decline in Indian exports to the US will likely only be three to 3.5 per cent.

READ | 

US' Reciprocal Tariffs May Have Limited Impact On India: Report


And this, the report says, can be offset by strategic export diversification.


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