Daybreak - ‘Boys will be boys’ — Trump, tariffs and the dismantling of global trade

Episode Date: April 11, 2025

In this episode, we talk about the global trade war that stopped before it started. First, we talk about US President Donald Trump's decision to reverse the "reciprocal tariffs" on almost every country in the world, except one. Next, we talk about why India had little choice but to offer concession after concession to the US. Finally, we unpack the long term and short term impact of the tariffs on the Indian economy. Check out the newsletters and podcasts mentioned in this episode: The latest edition of The Nutgraf by Praveen Gopal Krishnan — India is the mark Two by Two feat Mohit Satyanand — Are Trump's tariffs a crisis or an opportunity for India?

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too? It's for a special announcement. For the last few months, I and Sita Raman Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Hello and welcome to daybreak. I'm Rahil and I'm Snigda.

And in this episode, we talk about the global trade war that paused even before it started. Well, kind of. Tuesday this week. After his tariff plans sent the global market stumbling, do you know what the American president Donald Trump said? I know what the hell I'm doing. And for a while, Trump was kind of enjoying how it was playing out. Like he said, apparently global leaders were so desperate to cut a deal with him

that they were calling him up to, and these are his words, not mine, they were calling him up to kiss his ass. The next day on Wednesday, as the chaos and confusion continues, he said, be cool. Everything is going to work out well. Two minutes later, and he posted this in all caps, this is a great time to buy. But by afternoon, the same day on Wednesday,

in a dramatic U-turn, Trump announced a 90-day pause on the tariffs. Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know. They were getting a little bit yippy, a little bit afraid, unlike these champions. because we have a big job to do. No other president would have done what I did.

No other president. I know the presidents. They wouldn't have done it. Soon after, the stock markets resurrected and we saw the largest one-day gain in the history of the Bloomberg Billionaires Index. The world's wealthiest people added more than $300 billion to their combined net worth.

But this pause applies to all countries except China. Trump, in fact, raised the task. even more on China to 125%. He said this was effective immediately and it was because of the lack of respect shown by China to the world's markets. Now, funnily enough, while all of this tension had been escalating between US and China,

Trump casually appreciated the Chinese Premier Xi Jinping calling him a smart guy who knows exactly what has to be done. And in the same breadth though, he also made a reference to American five power saying we have weapons that nobody even knows about. Now, if all of this is making your head spin, you are not alone. Everybody is trying to make sense of what the hell is going on. And why we do not have a very clear picture, we thought it would be interesting to go behind

the scenes today and look at what has been happening inside Trump's inner circle. Now, here is where the story gets really bizarre. But by now we're kind of used to it, right? So, during his first election, Trump was looking for a financial expert to make him look tough and, you know, to help him take on China. So he asked his son-in-law, Jared Kushner, to find such a person for him. Kushner, and I'm not making this up, went to Amazon.com and began browsing books. And this one title caught his attention. It was a book called Death by China Confronting the Dragon, co-authored by this man called Peter Navarro.

Now, in this book, Navarro basically argues that China has an undeclared economic war going on with the Western world. But it is full of generalizations and has no actual empirical proof of all the claims that he makes. And like that was not bad enough, he keeps quoting this economist called Ron Vara to validate his arguments in the book. But here's the thing. Ronvara does not exist. Turns out, the economist is a fictional character created by Navarro himself. And his name is actually the anagram of Navarro. Navarro has actually even acknowledged this himself. He described Ron Vara as, and I'm quoting, a whimsical device and a pen name, used for entertainment purposes and not as a factual source.

Cut to now, Navarro is actually Trump's top trade advisors and the man behind his. many of his trade plans. He served as a senior trade official during Trump's first term and remained loyal to him even later on. He actually spent four months in jail for contempt of Congress after refusing to testify about the January 6th capital attack. Now, coming to the other big name inside Trump's inner circle, Elon Musk, also the richest man in the world. If you remember, around the same time as the tariff announcement came, Trump had also declared that Elon Musk would be leaving the Doge administration in the next couple of months. Musk also confirmed this later on. And ever since Trump announced his tariffs on the 2nd of April,

Musk is estimated to have lost about $31 billion. Obviously, he's not happy, especially with Peter Navarro. For example, just a day before the tariff pause, Musk called Navarro double than a sack of bricks. A day before that, in an interview with a business channel, Navarro said that Musk's Tesla was not a car manufacturer but actually a car assembler because it gets its parts from other countries. Musk then went on to call him Peter Retardo. I am still in disbelief as I'm telling you all this actually happened, but oh well, the world is the theater of the absurd in live action right now. Meanwhile, Trump has not said anything about the stiff between his two top men. But the White House press secretary, Carolyn Leavitt, tried to dismiss the situation in a way that makes it sound even worse.

Boys will be boys, she said. Next up, why now more than ever, India is the target. What are India's startups doing today? We are focused on food delivery apps, turning unemployed youth, into cheap labor so the rich can get their meals without moving out of their house. And against that, what does a Chinese startup do? Work on developing electric mobility, battery technologies. And with that, they're today dominating.

That was Commerce and Industry Minister, Piyush Goyle, speaking at the annual startup Mahakum event in the National Capital earlier this month. I can imagine a lot of startup founders feeling like they were being reprimanded at a Ptm after that, very turs dressing down. In fact, I know at least three or four billionaires whose children make on one brand or the other very fancy ice cream and cookies and run a very successful business and I'm no complaint against that. But is that the destiny of India? Now, Mr. Goyle's analysis of Indian startups grew quite heavily from a meme that was doing the rounds on LinkedIn and WhatsApp just a few weeks ago. It was titled India versus China, the Startup Reality Check.

The point of it was to show how India's startups are fixated on food delivery and bouchy snacks, while China is going all out on things like electric mobility, AI, deep tech. And Mr. Goyle's speech got a fair bit of publicity on social media, both good and bad. A lot of founders, executives, thought leaders said things like, oh, don't blame. start-ups, look at how many jobs they created. Or China also did food delivery before they built deep tech companies. Or of course the most predictable, maybe you should help these startups instead of blaming them. All valid points of view, sure.

But in the latest edition of the NutGrav Newsletter, my colleague Praveen Gopal-Kristan focused less on what Piyushkoil said and more on why he said it. That was more interesting to him, especially now that we are smack in the middle of a trade war between the US and China. So, Praveed in his newsletter looks at how the rest of the world responded to the US tariffs. On the same day that Mr. Goyle chose to chastised startups, China's commerce

ministry struck back against the US. It levied a 34% reciprocal tariff on imports from the US, which went up to 84% as the week progressed. It also placed restrictions on the export of rare earth materials, which are used to manufacture

batteries and EVs. And then, for good measure, it filed a lawsuit against the U.S. at the World Trade Organization. The EU also signaled that it wasn't averse to taking drastic measures of its own. Asian countries like Japan and South Korea at the time said they were alarmed and spoke about how the U.S.'s actions were regrettable. India's position, meanwhile, has been different. Praveen described it as a bit of, at least we don't have it as bad as the others, and a bit of this isn't going to affect us much.

While there is some truth to this, India hasn't quite followed through with its actions. Because in the past few weeks, it's gone ahead and given the US concession after concession. It scrapped import duties on 8,500 products, gotten rid of the 6% tax on ads with foreign digital platforms. It even let Starlink enter the telecom market. And it didn't do all of this out of the goodness of its heart. It did it because it was pushed against a wall. It didn't have the leverage that China did. think about it.

And Odei Kotaq pointed this out recently. What is one global Indian consumer brand that you can think of? The fact that you can't think of even one? Well, that is the source of frustration for Piyush Koyel. In his newsletter, Praveen dives into why India doesn't have brands, tech or startups that give it leverage internationally. And why that's so frustrating, especially in the current global climate. We will leave a link to his newsletter in the show-known.

of this episode, do check it out. Next up, what Trump's tariffs could mean for the Indian economy. Trump's mission to make America great again has seen him do things that most politicians, with their tall claims and promises, confidently assure, but compromise on once in power. Trump, in his second term, is going all in with his convictions. Now, while he may have paused on his reciprocal tariffs on most countries other than China, the relief is only momentary. It doesn't change the bigger picture much for India,

whose position to negotiate, like Rahil just told you, is not as advantages as that of some other US trading partners. In the latest episode of 2x2, host Rohan Darmakumar and Praveen Gopalakrishnan were joined by Mohit Satyanand, an entrepreneur, investor and economy watcher, to discuss in detail what the picture now looks like for India

and the world. Here is a short clip from the episode. What has happened over the last 10 years in India is a gradual incremental insidious increase in tariffs. Year upon year upon year upon year, upon year, you know. You mean that in terms of taxes or? Tariffs, tariffs, import tariffs. Okay, import tariffs.

And including those infamous quality control orders, etc. So those are non-tariff barriers, but I'm talking just about tariffs at a fiscal level. We've increased tariffs across the board, which is what allowed Trump to say that India is one of the worst offenders when it comes to tariffs. And he's absolutely right. We are, you know. Their average tariff is 3% or was 3% or is like 17%. So we've gradually stepped step down. back all the time. This old infant industry argument has been resurrected without really

articulating it as was articulated for 40 years from, you know, 47 onwards. At the same time, it's probably true that, and there was an Economic Times article about this, I think, either yesterday or day before, it seemed to be something which was dictated from the Commerce ministry, talking about the various ways in which the Chinese government protects its own people. I read this. Yes. This sounded like something coming out of, of the desk of some joint secretary in the commerce ministry. And it was probably dictated to him by somebody in the PMO, okay, irrespective.

Now, I'm sure some of it is true. But the question that we have to ask ourselves. is have we actually made it easier for the Indian entrepreneur to compete globally? And the answer is unequivocally, no. We'll drop a link to the full episode in the show notes of this one. That's all for today. But before we go, do tell us your thoughts on why India does not have even one consumer brand that stands out in the global market. Send us your answers as text or voice notes on our website.

app number. It's 8971-08379. I'll repeat that. 8971-08379. Also, what did you think of this episode? Do let us know and if you like it, do share it with your friends and family. Also, don't forget to give us a rating and hit follow on whatever podcast platform you're listening to us on. Thank you for tuning in and see you on Monday.