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Trump Tornado Continues
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Good Morning. US president Donald Trump is still at it, swinging his tariffs wrecking ball at just about every country. Be it Mexico and the European Union or America's asian allies Japan and South Korea, no one is spared. But could America's trade partners band together to take this on?
In other news, Adani Group sells 20% stake in fast moving consumer goods (FMCG) major Adani Wilmar. Meanwhile, IT giant Tata Consultancy Services’ benchmark policy raises concerns.
JANUS VIEW
Trump Continues Swinging His Wrecking Ball, China Makes Strides In Chip Race
US president Donald Trump continued to swing his wrecking ball at the world trading system. He has said that he would impose a tariff of 30% on Mexico and the European Union, and 35% on some goods from Canada.
He has threatened loyal Asian allies South Korea and Japan with a duty of 25%. On pharmaceuticals, he has promised an import duty of 200%.
Vietnam, he said, has agreed to duty-free entry of American goods while that country’s exports to the US would bear 20% duty. Vietnamese officials, however, demurred. They said they have only agreed to a 11% duty US imports of Vietnamese goods. This casts doubt on his 19% duty on imports from Indonesia.
That scepticism should apply to Trump’s claim that India, too, would agree to let in American goods without let or hindrance.
Tariff Tantrum
Trump has, probably, carried his tariff threats too far. Virtually every country now faces steep tariffs. This makes a level playing field, almost, for all exporters.
If Trump were to levy a 20% duty on Indian exports to the US, and India were to say, go ahead with the levy, where would the US source cheaper alternatives to the Indian supplies?
If the US levies virtually the same level of punitive duties on imports from all low-wage countries, the level of competition among the low-wage countries for the US market remains unaffected.
The American consumers would have to pay more, and probably, buy less, shrinking the market overall, without particularly affecting each exporter’s market share.
Is there a way to foil Trump?
China’s Chip Chase
China, meanwhile, is making rapid strides in its project to indigenise the entire chip-making ecosystem. China’s top chip manufacturer, Semiconductor Manufacturing International Corporation, can churn out 7 nanometre chips, but is bent on producing the 3 nm and 2 nm chips that Taiwan Semiconductor Corporation Ltd and Samsung make.
What remains for China to crack is to make in China the extreme ultraviolet lithography machines, currently a monopoly of the Dutch company ASML.
Ultra-thin circuits are built on silicon chips by lithography, that is, training focused laser beams on silicon wafers to create the tiny grooves, into which vaporised copper is subsequently deposited to create the nano-circuits.
Three Chinese companies are in the lead to create Chinese versions of extreme ultraviolet lithography machines.
MESSAGE FROM MASTERS INDIA
Simplifying GST for Large Enterprises
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CORE NUMBER
1,563
That’s how many Indians the US has deported since January 20, said Randhir Jaiswal, spokesperson of the Ministry of External Affairs (MEA) in a weekly press briefing. Jaiswal added that most deportees have returned via commercial flights.
🇺🇸 How We Got Here:
US President Trump won the election on a platform of deporting undocumented immigrants – since winning, the US has been cracking down on undocumented immigrants as well students who participated in political activism that criticised the US’s foreign policy.
📊 By the Numbers:
India comes in the top four countries that undocumented immigrants to the US come from – Trump deported 6,135 Indians in the previous tenure too. That number dropped under Biden: he deported 3,000 Indians. Trump’s crackdown has also impacted interest in studying in the US, a topic The Core has previously covered.
FROM THE PERIPHERY
SEBI To Extend Tenure and Maturity of Contracts. In a speech, Ananth Narayan, an official at the Securities and Exchange Board of India (SEBI), said that the markets regulator is looking to deepen India’s cash equity markets, in addition to improving the quality of the derivatives market by extending the tenure and maturity of contracts.
The Backstory: There’s an extreme imbalance between cash markets and the derivatives market — the options turnover is sometimes 350x that of the cash market. Moreover, most options trading is short-term, which discourages capital formation, Narayan added.
Break: Most small traders lose in options markets, according to SEBI’s own data. That’s a topic that The Core has extensively covered before. In part, that’s because of institutional players like Jane Street, an American trading firm that SEBI accused of market manipulation.
Adani Sells FMCG Stake to Wilmar. Adani Group has sold a 20% stake in AWL Agri Business (formerly Adani Wilmar) to Singapore-based Wilmar International for Rs 7,150 crore, at Rs 275 per share. This deal marks Adani’s formal exit from the FMCG business, aligning with its strategy to refocus on core infrastructure sectors.
The Backstory: Adani had sold a 13.5% stake in January for Rs 4,850 crore. With this latest transaction, Wilmar becomes the majority shareholder with a 64% stake.
Why It Matters: The total proceeds of Rs 15,729 crore will be reinvested into Adani’s infrastructure push, amid group-wide portfolio reshuffles.
India Eyes Oil Diversification: India will cope if Russian oil supplies are hit, amid US warnings of sanctions, Reuters reported. Oil Minister Hardeep Singh Puri said India now sources crude from 40 countries, up from 27 earlier, including new players like Guyana and existing ones like Brazil and Canada, reducing over-dependence on any one nation.
The Shift: The assurance follows US threats to penalise countries buying Russian exports if Moscow doesn’t broker peace with Ukraine. Russia now supplies 35% of India’s oil, up from under 2% pre-Ukraine war, driven by private refiners like Reliance Industries Ltd and Nayara Energy.
Catch Up Quick: India plans to fall back on pre-war suppliers like Iraq and Saudi Arabia, and tap new producers. “I’m not worried at all,” Puri said, citing rising domestic exploration and ample alternatives.
TCS Bench Policy Sparks Backlash: The first cycle of Tata Consultancy Services’ (TCS) new 35-day bench cap ends this week, marking the first time the company has formally implemented a time-bound policy for unallocated employees.
The Backstory: Staff who remain without projects for more than 35 days a year now face career setbacks or termination. Online forums are flooded with concerns over mismatched roles and forced relocations.
Why It Matters: IT workers’ union Nascent IT Employees Senate (NITES) has called the policy “coercive” and “punishing.” TCS defends it as structured accountability, but anxiety is spreading amid a broader sector slowdown.
HOW INDIA’S ECONOMY WORKS
From Jet To Air India: A Look At India’s Aviation Woes With Journalist Ashwini Phadnis
India's aviation sector has seen the downfall of many successful and well-loved airlines like Jet Airways and Kingfisher Airlines. Earlier this month, journalist Puja Mehra sat down with senior aviation journalist Ashwini Phadnis and former senior deputy editor at The Hindu Business Line about the long and chequered history of India’s civil aviation sector
"Both Kingfisher and Jet forgot to start looking at their bottom line. They thought that they had an endless pit of money. And they could just keep spending, keep spending, keep spending, irrespective of how big the losses were. And eventually, losses just mounted to such a level that it became unsustainable. They could not pay off their debtors," said Phadnis.
Among the existing airlines, while IndiGo has been able to get things right, Air India is going through a rough phase.
Phadnis said that IndiGo has been consistent with its low-fare product, which worked in its favour.
"If you want to travel for a comparatively lesser fare, take seven kilos handbag, which is provided free, don't take the meals, sit where they ask you to sit, and you're ready to fly at a lower fare. But you want the perks, pay a bit extra. You want more perks, pay a bit extra. And that is the model of a low-cost airline, which Indigo, till 2004, stuck to, after starting in 2007," Phadnis said.
As for Air India, Phadnis believes that the Tatas could be in over their heads.
"So, I think the best way of summing up the situation the Tatas find themselves in is to come up with what is said globally about an airline, that if you're a billionaire and want to become a millionaire, start an airline. And if you see the Tatas, that is where they seem to be headed right now, because they haven't got their house in order."
What could Tatas do as Air India continues to fumble?
THE SIGNAL DAILY
Trading Options Is a Losing Game. So Why Can’t We Stop?
Nine out of ten small traders lose money in options, according to SEBI’s own data. That’s in part because of institutional investors, who have massive capital and fancy algorithms on their side.
Many retail traders aren’t aware of this. But, even those who are familiar are still drawn to options trading. Why?
In the latest episode of The Signal Daily, we’ll hear from traders and a behavioural finance psychologist to learn more. What are the signs that someone’s stuck in a toxic cycle, and how can they get out of it?
The Core produces The Signal Daily. Follow us wherever you listen to your favourite podcasts.
PODCAST
On Episode 636 of The Core Report, financial journalist Govindraj Ethiraj talks to Ashvin is the Chief Strategy Officer for Consulting in Deloitte Asia Pacific as well as Sandip Agarwal, Fund manager at Sowilo Investment Managers LLP.
Why IT stocks are pulling the indices down
US-India trade deal imminent, says Trump again.
India has sufficient options for oil imports if sanctions on Russia, Govt.
A top Sebi official says staggering derivative losses could have gone towards responsible investing and capital formation.
And on AI Appreciation Day, a look at where AgenticAI could change the way companies interact with customers.
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✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas