00:00Hello and welcome to this very special broadcast on One India, while Donald Trump has actually
00:18spoken what he had to, and after that, the fallout, the tumblings of the trade barriers,
00:27the relations, and the possibility of what lies next for so many countries who have been
00:33doing trade with America, depending on them, maybe importing or exporting items from them.
00:40The big question as of now here is whether those countries would retaliate or they would
00:46take a lying down what Donald Trump has announced. The jury is still out and to measure the intensity
00:54and to discuss the matter that where does it stand and why these tariff issues are important
01:00and innate, not just to the world, but also for the Americans. We are joined by Marutha Bharati,
01:07all the way from California in the United States. Marutha is a member and a businessman into the
01:16logistics and supply chain field. Marutha, thank you so much for speaking to One India,
01:21quite a hectic day, I would say there. Of course, yes. And thank you, Pankaj,
01:27you know, for the opportunity and to address this issue. Yeah, it has been a busy few weeks
01:34and a busy few hours, even more. The big announcement that Donald Trump also that
01:44the plug in his hand also spoke a lot of volumes and you being from logistics and supply chain,
01:49an industry, a sector which would be directly impacted, if I'm not wrong,
01:53we would be coming to that, Marutha. But before that, I want to understand from you
01:58the United States domestic situation. Let's start from home where you are. What impact
02:05these tariffs have on American consumers and businesses? And will they truly protect
02:11US industries or lead to higher costs and job losses there?
02:16So that's a very important question to address. And also, before I go into that, let me try to
02:23understand or characterize what are the objectives that the President Trump is trying to achieve
02:28here, you know. So one is, of course, to re-industrialized the US, it has lost a lot
02:35of manufacturing capacity over the last two, three decades, you know, they want to get some
02:39of that back. And they want to get some of the manufacturing jobs back, especially in the
02:43Midwest, where it kind of got hollowed out over the past two decades. So and then the other
02:49objective is to reduce the budget gap. There is a huge US trade deficit, you know, so not only
02:56trade deficit, the budget deficit, which has been very popularly spoken about everywhere. So one of
03:03the direct things that they are anticipating out of this tariff action is, you know,
03:08high collection of customs duties. I was even listening to some analysis today morning, which
03:15was as high as $600 billion per year or something, you know, that seems like a really high number,
03:20you know, that's the amount of money that they're anticipating for the tariffs, which could help
03:25fill up the gap to some extent. But there is also an expectation, there will be more investments
03:30because of this, because of plans coming back to the US, that's spurring economic growth,
03:36and which will also eventually help bridging the gap. These are the stated objectives, right?
03:41But can production shift that quickly? And that effectively, you know, that's,
03:47that's a million dollar or billion dollar question, you know, maybe even a trillion
03:50dollar question. So my take is, it might be slow and strategic, rather than, you know,
03:57so one of the things any brownfield project in the US or greenfield projects in the US,
04:03so even plan, and to get to a stage of construction and starting, it takes about one,
04:09one and a half years, and then subsequently, another one, one and a half years to construct
04:14the factory has trained employees, and to get there. So these capacities are not going to be built
04:21overnight. But there's, of course, already capacity available, which might get utilized a little
04:26better now. So, but given the cost arbitrage, you know, I was seeing some analysis today morning,
04:35that the labor cost arbitrage between the US and even Mexico, for example, for highly skilled
04:42manufacturing job, maybe $70 in the US per hour, vis-a-vis $8 or $10 in Mexico, right?
04:51This could be similar for China or any of the emerging economies, you know, so it may not,
04:57it may not happen that all these industries may not move back to the US, you know, for example,
05:02footwear or garments may not, right? So there will be strategy, little bit more high end,
05:09little bit more value added manufacturing might move back, you know, and especially the ones which
05:14are politically sensitive, like auto and steel and aluminum will, you know, probably move,
05:21you know, slowly, but it'll move. And on the question of consumer impact, right? I think
05:28that is where I think the bigger focus needs to be and rightly so, because this is definitely
05:34going to be inflationary, you know, we can't escape that, because the tariffs are pretty steep.
05:39So, the Fed's initial take was that this is going to be transitory. But this was before
05:46these announcement came in. So we have not seen a newer analysis from them yet.
05:51But there is the real serious concern in the community in Wall Street and everywhere is,
05:57will this lead to stagflation, right? So can the economy stagnate and at the same time have
06:03high inflation? That is a question that, you know, we don't know an answer to. Hopefully,
06:09it doesn't spiral into that, you know, so yeah, and business confidence is low, the markets are low.
06:18So the investment might be a little bit slow to take off until clarity emerges. But I don't.
06:25So, I mean, one of the things I take it as a thumb rule is that, you know,
06:30never against the US economy, and the US people, they're pretty resilient. I think they will find
06:36solutions out of this. I think this is not a permanent situation. I think it is probably a
06:42starting point for negotiation. I think we will, things will start changing and become, you know,
06:48improving. That's my overall take on this. Absolutely. That positive thought process
06:55must continue. But as far as this morning, performance at the New York Stock Exchange
07:01is concerned, not very healthy, not very encouraging, I would say, and similar situations
07:06here in Asian markets as well. Gold, on the contrary, has gone up like anything. So obviously,
07:13people are going for more secure investments and possibly, you know, not looking at any other
07:19option. Marutha, you come from India, you have traveled, you have stayed in India,
07:24at different places, be it the commercial capital Mumbai to the tech capital of India,
07:30that is Bangalore. Where do you see that New Delhi stands as of now? And what possible strategies or
07:35course corrections do you think that you or your company or the sector on the whole needs to make
07:41in order to fit in to this new matrix? So I don't want to see this as an end point. So in that sense,
07:48I don't want to judge it as a win or a lose for either side. So I would rather say that this is a
07:55momentary point, you know, a point in time. So I think we should look at it as a maybe,
08:04I think there is probably already back channel discussions going on between India and the US.
08:09India and US have been natural partners for a long time. And that is reflected in the trade
08:14growth we are also seeing. So I don't think that it's a, I think we have to look at this
08:20from that prism all the time, you know, for the long term view, we are noisy democracies, our
08:25cultures are pretty similar, very entrepreneurial people on both sides. So the trade is only going
08:30to grow, irrespective. So and relatively, we are not one of the worst impact. So
08:39and I have a feeling that, you know, being Trump is known for willing to make deals,
08:46I think India should reach out, you know, make it a little bit more easier for the US businesses to
08:52do, US to have more market access in India, make it a little bit more for US companies to invest
08:59in India. I think good on a little bit of give and take, I think will benefit both countries.
09:04And that will deepen our relationships even further. So I'm, I think this might be an
09:11opportunity, you know, so that is, so I don't see this as a win or a loss at this stage.
09:15Okay, that's fair and square, I would say. But Marutha, taking a bird's eye view of,
09:21you know, the look at the larger picture here, in the Asian continent context,
09:28do you think that these tariffs are somehow aimed or targeted at China and India, or the Asian
09:36subcontinent on the whole? This is interesting. You know, I have a mixed response to yes,
09:42in terms of effect, it has a severe impact on the China, the Southeast Asian economies,
09:49I would call them actually China cluster countries. So I have a reason for that. I'll
09:55come back to it later. So these countries seem to be affected more because their tariffs are high.
10:02But if you look at the way they have approached on how to arrive at this reciprocal tariffs,
10:06I don't think so that was the intent. So the formula is pretty simple. You know,
10:11since yesterday, you know, there's been a lot of things on the web, you know, everywhere
10:15circulating how they've arrived at these numbers, it's simply based on how big your trade gap is
10:20divided by how much imports are you bringing into the US from your respective country. And
10:26there is a straightforward formula. And then they have divided that by two, and
10:30then they arrived at a rough number. So with the base tariff of 10%, of course, that's a
10:36different thing. Let's come to that later. So China and these Southeast Asian countries,
10:41especially Cambodia, Vietnam seem to have been really severely impacted. I believe even China,
10:47the 34% was not just 34, it's 34 on top of already announced 20%. So which makes them also
10:53over 50%. So China is 54%, Cambodia is 49%. And I think Vietnam is I think, 44%, something around
11:01that. So these are very high numbers. So in effect, yes, it has impacted them highly. And then,
11:08but that doesn't seem to be the intent. You know, since we are discussing China,
11:14now we have seen in the past as well, be it the COVID times, Donald Trump and China don't go well,
11:23at least as far as the press interactions are concerned, as far as the public opinion being
11:29shared is concerned. There are two things that are being talked about. You mentioned the first one
11:36correctly is about maybe sweetening the deal, maybe starting the back channel talks. But when
11:43it comes to the second aspect, trade war, that is also coming in from all sectors. Let's begin with
11:50China, before we go to EU and other countries. Trade war, do you see any fallout going ahead
11:56between the US and China? You are very right in pointing out the trajectory of the US-China
12:01relationship has not been in a positive path over the last 10 years or so, which is understandable.
12:08You know, it is not just President Trump, I think even the next administration was pretty much on the
12:13same trajectory. So there is no love lost. I mean, and there will of course, and China has to
12:20react publicly. So of course, they will do something, you know, pretty soon. They haven't yet announced
12:25anything, but I'm expecting that they will do something where it hurts the US a little bit.
12:30But I think they are also very pragmatic. And unlike the last time, I have a feeling China is
12:35super well prepared this time. I think they have already built a war chest is what I understand
12:40in terms of spurring local economic growth. I think they've got this as an opportunity to
12:46diversify their dependence away from US into making more deals with other countries around
12:53the world, and focusing extremely highly on the domestic economy. So beyond the initial rhetoric
13:01and reactions, I don't think so that this is going to escalate into a major trade war. And
13:07yeah, that is my expectation. That doesn't mean there will not be impact, but it may not be
13:14an outright trade war. Okay, one final question in the interest of time.
13:21Now that, you know, it is certain that the US has rubbed China, EU, India, to a certain extent,
13:27the wrong way. If there are countermeasures, do you think that such a huge consumer base and you
13:34being part of logistics, can United States afford to antagonize this particular belt of consumers?
13:45Or is it there is a silver lining somewhere down the line?
13:48You know, as I said, the answer lies in how we want to look at it. Is it temporary? Or is it
13:54a permanent reality? Right? So I have a feeling that the European Union, Indian government
14:02response, even though the rhetoric might be sharp, I think they will be very calculated,
14:09very calibrated, and a very measured response from their side. You know, Europe is already
14:13talking about phased tariffs and retaliation. So there will be room in that for negotiations
14:19and settling down at a more accommodated situation. And so, I don't think that this is
14:26permanent. So, I mean, I think every country will take it that way. I saw a reaction from
14:33Australia PMS today, you know, again, very sharp rhetoric, but they said they're not going to react
14:39to this. Right. So I think that is the kind of tone I expect from most of the countries.
14:46Sharp rhetoric, but measured actions, and a lot of back channel discussions to settle this.
14:53So, so I don't want to really be alarming, alarmist at this stage. So,
14:58as on the consumer side in the US, you're right, you know, it will impact a little bit quicker.
15:05But let's see how quickly you know, they can make deals with these countries.
15:08Right. Thank you so much. Once again, obviously, it's all this hype and hoopla, you know,
15:15be the tariffs be the domestic situation. There is one common thread that Donald Trump at least
15:21must not lose sight of is make America great again, MAGA. That is something that he has to
15:27deliver upon. Thank you so much, Martha. The world is yet to come to terms of what Donald Trump has
15:33announced on the evening of 2nd of April. Thanks for watching this broadcast.
15:41Thank you. Don't miss out. Log on to OneIndia.com for more updates.
