India Ditches Tariff Throne? Bear Grylls on the Hunt for New Trade Deals

The Tariff King Abdicates... Or Does It?

Right so word on the street – or should I say in the jungles of global economics – is that India's thinking about ditching its 'Tariff King' crown. Apparently they're considering zero tariffs on steel auto parts and pharmaceuticals from the U.S. Now I've eaten worse things than a bad tariff but this is a big deal. For years they've been slapping hefty import duties on everything from tractors to tech gadgets. But remember adapt improvise overcome! Even tariff kings need to evolve right? The wilderness waits for no one and neither does the global economy.

Trump Card? Maybe More Like a Bartering Tool

Let's be honest these 26% tariffs that Trump slapped on Indian exports (before suspending them) probably had something to do with it. Sometimes you gotta get bitten to realize you need to change your course! As Trump said negotiations had been "coming along great ... we'll have a deal with India ." See a little bit of pressure and suddenly everyone's a team player. It is important to bring down trade barriers and open itself up to more free trade deals with other countries especially the U.S. But are they jumping from the frying pan into the fire? Only time will tell. Remember there's no such thing as bad weather only inappropriate clothing... or in this case tariffs.

The Billion Dollar Question: Manufacturing Mayhem?

So what happens to India's dreams of becoming a manufacturing powerhouse if they start letting in all these U.S. goodies duty free? Will the local lads survive? One thing's for sure it's going to be a fight. India will be careful not to do anything that will harm domestic businesses. Yes India wants a deal with the U.S. because it is our biggest market in terms of goods and services imports and exports. But zero tariffs is quite ambitious and I don't see the government taking such a big step. It's a bit like choosing between a comfy campsite and a risky climb. High risk high reward but you better be prepared for a fall!

Steel Yourself: Will U.S. Steel Conquer India?

Some experts think all this tariff talk is just hot air. Exporting steel from the U.S. to India is a "money losing proposition," given the high transportation costs. One portfolio manager at Matthews Asia does not see a substantial impact on India's steel pharmaceuticals and auto parts sectors. They reckon U.S. steel will never make it that far due to cost... well I reckon they haven't met my transportation budget when I’m trying to get back to civilization! You gotta admire their optimism though. But let's be real nature is unpredictable. And so are markets.

Pharma Fiasco? Cheap Meds vs. Luxury Cures

And what about those pharmaceuticals? They produce a lot of patented drugs amounting to "hundreds of thousands of dollars," which only the ultra wealthy can afford. A vast majority will be priced out from such products he said adding that the absence of tariffs on pharmaceutical imports will "not alter the structure of the industry in India.". Will they be able to get those cheap life saving medicines? It's a jungle out there and sometimes you need a good dose of survival medicine! Either way the absence of tariffs will "not alter the structure of the industry in India.

Winners Losers and the Stock Market Jungle

So who are the big winners and losers if this deal goes down? Financials — namely large cap banks — materials and healthcare if the U.S. and India make a deal. And logistics companies across port operators railways and road transportation service providers — as there will be higher demand for their services. There are some who are betting on the sidelines. And the ones that are going to benefit from higher consumption in a low inflation and interest rate environment? Well it's like finding a hidden oasis in the desert! But as I say there is no such thing as a free lunch – particularly not in the markets. The outcome of the trade negotiations bullish on consultancy giants Tata Consultancy Services and Infosys given that they focus on services and are "not manufacturing or sending anything to the U.S. The ecosystem is becoming bigger in India and we think it's going to become self fulfilling. And there's always something new on the horizon – just keep moving forward and never give up!