'Strong nations can do what they want': Nilesh Shah on Trump tariffs, says India hit lower than most of its peers

Nilesh Shah, MD of Kotak Mahindra Asset Management, recently commented on US President Donald Trump's announcement of reciprocal tariffs on India, China and several other countries. Taking a jibe at the announcement, Shah said that strong nations can do what they want. 

He even quoted Sant Tulsidas, the creator of Ramcharitmanas, to substantiate his point. "Samarth ko nahi dosh gosain" means that people in power or those who are strong often do not get blamed for their actions, even if they make mistakes whereas weaker individuals face criticism even for minor actions. 

"My two bits on the trump tariff saga. President Trump is proving what Sant Tulsidas wrote centuries ago. "Samarth ko nahi dosh gosain" WTO is meant for weak nations. Strong nations can do what they want," he wrote in a post on X (formerly Twitter).

Shah mentioned that the developed nations may even calculate tariffs as a deficit with the US divided by exports to the US and get away with it. "We will soon see a case study to justify this novel definition," he said. 

Besides this, the market expert also underlined the world will respond to US tariffs through currency weakening, negotiation with the US under clause 4 of the order to alleviate their concerns, counter-tariffs and even lobbying within the US to challenge this order in courts.

Impact on India and its peers

Coming to India, he said the country has been hit much lower than most of its peers. The US has levied 27 per cent reciprocal tariffs on India as against 29 per cent on Pakistan, 37 per cent on Bangladesh, 36 per cent on Thailand, 32 per cent on Taiwan, 44 per cent on Sri Lanka, and 44 per cent on Myanmar. 

"India has been hit lower than most of its peers. It is up to us how we manage the situation. We can bring footwear and garments business from Asian peers if we get our act together," he said. He also mentioned that India needs to be proactive about China dumping goods in the Indian market. 

"We have to be proactive about Chinese dumping. We should negotiate hard with China to create a win-win situation rather than the usual lose-lose situation."

Impact on US economy and markets

Further in his post, Shah predicted that the mass tariff hike in 2025 will not have the desired outcomes for the US economy and markets. 

He explained that the US has imposed tariffs like this in 1828 and in 1930, both of which resulted in the recession/Great Depression. The Kotak Mahindra Asset Management MD noted the tariff hike will result in lower growth and higher inflation. 

"If the US markets are correcting, US consumption, which accounts for two-thirds of the economy, could come under pressure due to higher inflation and the evaporating wealth effect. For emerging markets, it will be called stagflation, but for the US, it will be called a hard landing."