Substack

Friday, August 15, 2025

Weekend reading links

1. McKinsey is facing new challenges following the expansion of its digital practice.

In the 2010s, as many chief executives grew increasingly nervous that their companies would be the next victims of digital disruption, McKinsey invested to broaden its offerings. Between 2013 and 2023 it acquired at least 16 specialist technology consultancies, giving it the ability to assist clients not only with their digital strategies, but everything from developing prototypes of new products to building whizzy data-crunching tools. That points to the final source of the firm’s recent expansion, as it has pushed more widely into implementing its own advice. Having counselled a client to spruce up its technology, sharpen its operations or squeeze its suppliers, McKinsey will often now hold their hands through the process. That has meant muscling in on a segment of the consulting market traditionally dominated by Accenture and the “big four” professional-services giants, which charge considerably lower rates, notes Tom Rodenhauser of Kennedy Intelligence. To compete, McKinsey has had to rethink how it charges clients (fees are now often tied to the results of a project) and whom it hires (focusing less on generalists, more on geeks and grizzled executives).

And there's the threat from the newbies like Palantir.

As bosses look to AI to transform their businesses, they are asking McKinsey and other consultancies for help. But they are also turning to less conventional partners. Palantir, an analytics firm, offers tools to feed enterprise data into AI models, and embeds its so-called forward-deployed engineers with its clients to get them up and running. Its revenue is still small (just under $3bn in 2024) but is growing at a blistering pace (48%, year on year, in the second quarter of 2025). Although it began by serving governments, it now makes over two-fifths of its revenue from businesses. Its market value has septupled over the past year, to more than $400bn. Analysts at UBS, a bank, describe Palantir as “McKinsey meets Databricks”, alluding to a software firm whose tools also help enterprises connect their data with AI models. That sounds a lot like QuantumBlack, McKinsey’s own AI unit and the crown jewel of its digital practice. Other AI companies are taking inspiration from Palantir, too. OpenAI, maker of ChatGPT, has begun offering a consulting-like service to help businesses deploy its models.

2. Impact of Trump tariffs on India's $86.5 bn exports to the US.

3. Taiwanese public opinion on integration with China.

4. Naushad Forbes writes about India's corporate R&D landscape.
We invest 0.3 per cent of gross domestic product (GDP) in in-house R&D to a world average of 1.5 per cent. Our 10 most successful non-financial firms (highly profitable firms in refining, information technology services and consumer goods) invest 2 per cent of profit in R&D; whereas their 10 most successful peers in the United States, China, Japan and Germany invest between 29 and 55 per cent. And Indian firms are completely missing in five of the 10 most technology-intensive industrial sectors worldwide… Our hundredth largest spending firm invested about ₹97 crore in R&D in 2022–23; our two-hundredth largest, about ₹33 crore; and our three-hundredth largest, about ₹16 crore. These are small numbers relative to the world’s leading firms.

5. China seeks to consolidate its semiconductor chip making industry.

Consolidation in the chip equipment space would help boost China’s bid to build a self-sufficient semiconductor supply chain and replace equipment from US groups such as Applied Materials and Lam Research, said Edison Lee, semiconductor analyst at Jefferies. Currently, a Chinese fab buying local equipment has to use multiple vendors, whose technology is not well integrated. “In the equipment industry, it is difficult to be very successful as a single-product company. Fabs prefer to buy multiple machines from the same vendor, which makes it easier to use,” he added. By consolidating, Beijing also hopes to better direct funding to firms deemed strategically significant... Little progress has yet to be made in consolidating China’s sprawling network of foundries — a segment that remains highly fragmented and politically sensitive. The past decade saw a surge in foundry projects backed by local governments, many of which built capacity in parallel, resulting in a glut of supply of mature chips and steep price competition. Chip experts note that China could also benefit from streamlining its advanced fabrication market, to concentrate talent and the most advanced chip equipment machinery in one place instead of being spread across disparate projects.

6. Some details of where Apple will source its US components from

For example, Apple said that all of its cover glass for iPhones and Apple Watches would be made by Corning in Kentucky, and that it would spend $2.5 billion on that effort... Apple also highlighted its partnership with Coherent, a longtime supplier of lasers for Apple’s facial recognition hardware, which is made in Texas... The iPhone maker said it expanded a partnership with Texas Instruments to make chips in Texas and Utah. Texas Instruments has long supplied chips for the iPhone, such as circuits to control USB interfaces or power displays... Other partnerships are with Applied Materials, a tooling company, GlobalFoundries, a chip foundry, and GlobalWafers America, which is supplying Taiwan Semiconductor Manufacturing Co. and Texas Instruments with made-in-USA wafers, the starting point for a batch of chips. GlobalFoundries manufactures chips for Broadcom, which supplies wireless chips for iPhones. Both will work with Apple to develop and manufacture 5G components in the U.S. Meanwhile, Apple will buy millions of advanced chips made by TSMC in Arizona, where it will be the factory’s largest customer... Apple said it would invest in and become a customer at an Arizona Amkor facility, which packages and tests chips, the final stage before installation in a computer. Apple also said it would expand existing data centers for artificial intelligence in North Carolina, Iowa, Nevada and Oregon.

This is a break-up of Apple's spending a year

In Apple’s fiscal 2024, the company spent $210 billion globally on cost of goods sold, $57.5 billion on operating expenses and $9.45 billion in capital expenditures for nearly $275 billion in global spending during the period.

7. Global rice prices plunge to an eight year low on the back of record harvests and India's resumption of exports. 

Indian refiners had gained $16bn in extra profit from importing discounted Russian oil, with almost $6bn of that going to Reliance... Before Moscow’s full-scale invasion of Ukraine in February 2022, India imported a minimal amount of Russian seaborne crude. Indian government data shows it has since bought discounted Russian oil worth nearly $140bn, which Ambani’s Reliance and others have processed into petrol and diesel for sale in both domestic and international markets... the country’s refineries operate by the book and that oil from Russia, unlike Iran and Venezuela, has not been subject to direct sanctions. Washington previously made no objection to the trade, as long as purchases were priced below the $60-a-barrel G7 price cap intended to limit Russian revenues while keeping oil flowing into the global market... Energy Aspects estimates that since the start of the war in Ukraine, India has received an average discount of $11 for each barrel of Russian oil compared with the international price of crude, though the discount has fluctuated and is now about $2 before freight costs.

See also this

9. Fascinating discussion about towns in France and England.
Yet it is shocking to realise that the medieval feudal lords had more of a stake in ensuring their new towns were sustainable than most property developers today. “The private sector has no financial interest in the sort of heavyweight placemaking you need to build at scale,” argues Hugh Ellis, director of policy at TCPA. “Even mining companies in the 1920s cared more about providing a decent home for their workforce than modern property development does.” Thrift adds: “If you look at the private sector housebuilding model, their necessity is to get the highest possible price for that house on the day they sell it. If it all goes downhill afterwards, it really doesn’t matter, because they’ve gone somewhere else by then.”

By contrast, the postwar new towns had a strong stewardship model of “owning the shops in the town centre and the business premises in the industrial area, having that money coming back in and being able to reinvest it for the good of the town and its maintenance,” says Congreve. But Ellis adds that the model “was deliberately broken in the 1980s by an ideological decision to basically vandalise the programme by forcing a fire sale of most of their assets to the private sector”. One reason why Milton Keynes — often held up a model new town — still has such good green spaces is that when its development corporation was wound up in 1992, a trust was created with an endowment to continue to manage the parkland.

10. Turmoil in the Chinese military as Xi replaces officials accused of corruption.

Three of the seven seats on the Central Military Commission — the Communist Party council that controls the armed forces — appear to be vacant after members were arrested or simply disappeared... Mr. Xi has set a 2027 target for modernizing the People’s Liberation Army, or P.L.A... In the first years after Mr. Xi came to power in 2012, he launched an intense campaign to clean up corruption in the military and impose tighter control, culminating in a big reorganization... The most jarring absence in the military leadership is that of Gen. He Weidong. The second most-senior career officer on the Central Military Commission, General He has disappeared from official public events and mentions, an unexplained absence that suggests he, too, is in trouble and may be under investigation. Another top commander, Adm. Miao Hua, who oversaw political work in the military, was placed under investigation last year for unspecified “serious violations of discipline,” a phrase that often refers to corruption or disloyalty. He was among around two dozen, if not more, senior P.L.A. officers and executives in the armaments industry who have been investigated since 2023, according to a recent tally by the Jamestown Foundation. Both men had risen unusually quickly under Mr. Xi’s patronage...
Since Mao Zedong’s era, the military has served not only as a fighting force but also as a lever of political control for Chinese leaders, as their ultimate protection against potential rivals or popular uprisings... Mr. Xi is the only civilian party leader who sits on the Central Military Commission, which ensures his singular power over the military. That also means that he cannot turn to other civilian officials to help him... The purges are likely to disrupt coordination, weaken confidence in commanders and prompt Beijing to be more wary of considering an amphibious assault on Taiwan

11. Excellent NYT editorial video advocating a change in the air ticket tax to fund the Federal Aviation Authority (FAA) that ends up as a case of taxing the regular air travellers to subsidise private jets. 

12. How the surge in gold exports provoked Trump's 39% tariff on Switzerland.

America’s trade deficit in goods with Switzerland was just over $38 billion last year. In the first six months of this year, the deficit ballooned to nearly $48 billion... In recent months, two-thirds of Switzerland’s exports to the United States were accounted for by various forms of gold. These bars of gold are often sent from London, a trading hub, to Switzerland, a refining hub, where the metal is forged into bars sized for the standards required by U.S. warehouses and then shipped across the Atlantic. Surging demand for gold in the United States as Mr. Trump threatened to upend the global trading order fueled a spike in Swiss gold imports — and greatly expanded the U.S. trade deficit with Switzerland. Excluding gold, Switzerland’s mammoth pharmaceutical industry accounts for half the value of Swiss products shipped to America. In 2024, Swiss drug companies, which include the pharma giants Roche and Novartis, exported around $35 billion worth of medicines, cancer treatments, vaccines and other drugs.

13. Some facts and observations about GCCs.

There are over 1,000 global organisations that collectively operate over 1,700 GCCs across India. They employ over 2 million professionals. They generate over $40 billion in annual value, set to surpass $100 billion in another five years. So, what’s the problem? Well, most GCCs are technically doing work that could have been outsourced to Indian outsourcers like Infosys, TCS, Wipro, HCL, etc. In fact, GCCs are so successful a strategy that they’re growing much faster than Indian outsourcers. And as if taking away potential revenue from Indian outsourcers weren’t enough, GCCs are now also taking away talent. That’s right. They’re hiring experienced and talented professionals using higher salaries, better brands and the promise of better work.

It's time somebody analysed the nature of the work done by in-house GCCs and that done by outsourced service providers like the Indian software firms. Is it significantly a case of the multinational firm (a) vertically integrating its activities and bringing them in-house, or (b) identifying more outsourceable work and relocating them to India, or (c) doing non-outsourceable, higher-skilled work in India? 

14. Fascinating statistic from Ruchir Sharma on wealth-creating companies.

Since 2015, the world has generated a total of 444 companies with average annual returns in dollar terms of more than 15 per cent, and a market cap that today exceeds $10bn. A solid majority of these — 248 — emerged outside the US... Countries such as Japan, Canada, Taiwan, Switzerland and Germany have their fair shares but the big numbers are in China, with more than 30 such compounders and... India has produced 40 steady compounders in that time. Most of the compounders have arisen in manufacturing, tech or finance... More than 50 — and thus more than one in five — of the steady compounders are European. And after a long slumber, signs are emerging of an entrepreneurial awakening: the number of tech start-ups in Europe more than quadrupled in the last decade to 35,000... Since 2015, the global billionaire population grew by 1,200 to over 3,000, and seven out of 10 new ones surfaced outside the US. While the number of names on the Forbes list grew by 70 per cent in America, it grew by 90 per cent or more from India and China to Canada, Israel and even Italy... Another cloak obscuring wealth creation worldwide is the market for private equity, credit and other assets, also widely seen as a US preserve. Nearly half of the $13tn in these private assets, and more than half in categories such as venture capital and infrastructure projects, is held outside the US. Unicorns — private firms valued above $1bn — are not an exclusively American species either; roughly 40 of the top 100 are based in other countries.

15. In a remarkable arrangement, the first such one, Nvidia and AMD have agreed to pay 15% of the revenues from chip sales in China to the US government in return for export licenses for their chips.

The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, according to people familiar with the situation, including a US official. The US official said Nvidia agreed to share 15 per cent of the revenues from H20 chip sales in China and AMD will provide the same percentage from MI308 chip revenues... According to export control experts, no US company has ever agreed to pay a portion of their revenues to obtain export licences... Nvidia tailored the H20 for the Chinese market after President Joe Biden imposed tough export controls on more advanced chips used for artificial intelligence.
Trump has basically converted the US into a country where the rule of law has been replaced with the rule by law (made by Trump himself personally)! Talk about institutions!

16. India's exports to the US and their share of the country's exports of those products.

17. Europe rearms.

EU defence commissioner Andrius Kubilius told the FT that since Moscow’s invasion, Europe’s annual capacity to produce ammunition had increased from 300,000 to reach about 2mn by the end of this year Rheinmetall’s expansion will account for a big part of this growth: the company said its annual production capacity for 155mm rounds was set to rise from 70,000 in 2022 to 1.1mn in 2027.
18. In order to overcome deflationary pressures and stimulate household spending, China announces an interest subsidy of 1 percentage point on consumer loans (typical consumer loan interest rates are 3%) for purchases up to Rmn 50,000 ($7000). The subsidy will be borne 90% by the central government and 10% by local governments. This shift away from investment subsidy to consumer subsidy comes on top of a "trade-in" scheme whereby buyers can receive subsidised prices when they upgrade old goods like smartphones, air conditioners, and rice cookers. 

Monday, August 11, 2025

Some thoughts on six months of Trump 2.0

I had blogged here with some early thoughts on Trump 2.0 and had said that I’ll revisit them as the administration progresses. This is a six-month stock taking. 

It’s now clear that Donald Trump is single-handedly redrawing the economic and political map of the world. The former (economic) is already done, and the latter (political) must follow in due course. While there’s some clarity on the contours of the former, though its long-term consequences may still be uncertain, the impact on the latter may be slower in emerging and likely more profound. 

Whatever its merits and however vague the trade deals, he has managed to bully and arm-twist almost the entire world to unilaterally open up their economies; accept an unthinkable level of high tariffs on their exports to the US; commit to purchase vast quantities of US goods like oil, gas, and arms; and commit hundreds of billions of dollars in manufacturing and other investments in the US. The abject surrender by the EU’s 27 members after holding out initially for zero-for-zero tariffs, exemplified by Ursula Von Der Leyen’s virtual prostration before Trump at Turnberry, Scotland, will remain as the totemic moment in this regard. 

He forced America’s NATO allies to voluntarily commit to raising their low shares of total defence expenditures to 5% of GDP, including 3.5% of GDP for core defence requirements, by 2035. And the European allies have already started taking action in their budgets. 

Not even the most imperial and colonial of powers and kings/rulers could have wrested such commitments. And all this has been done without a bullet being fired or a bomb being dropped. It would have been unimaginable for anyone to think that a single man’s bully diplomacy could have brought the entire world to its knees without even a fight. Countries have reluctantly acquiesced into these egregiously one-sided trade deals on the simple belief that it’s better to strike these deals than suffer greater damage from tit-for-tat tariffs. Such has been the fear generated by one man that leaders globally have refrained from publicly criticising or contradicting him. 

In this respect, the first six months of Trump 2.0 are enough to be described as the most imperial moment in world history. Previous imperial kingdoms held sway over small parts of the world, but this one rules over the world as a whole.

The FT’s Robert Armstrong coined the delicious phrase, Trump Always Chickens Out (TACO), to describe the US stock market’s surprising calmness in the face of Donald Trump’s capricious policies. This needs to be qualified. TACO applies only when there’s a match on the other side. The bond markets and China are two standout examples. Even those like Mexico’s Claudia Sheinbaum and Canada’s Mark Carney, who have kept their card close and refused to play the Trump-pleasing game, have managed to keep Trump guessing. But in all those cases (except perhaps the UK) where countries have gone overboard in trying to please him, he has slapped tariffs and wrested other commitments. All this only confirms the adage that a bully always wins against those who do not stand up to him. Sadly, world leaders, at least for now, have sought to acquiesce rather than fight. 

While the immediate economic impact of these policies in the US is most likely a recession and higher prices sometime next year, their medium-term consequences for the US economy could, on balance, even be beneficial. This is perhaps the most optimistic scenario for the US economy. For a start, even after Donald Trump leaves and even if a Democratic administration emerges, some of these tariffs will likely stay. The regime that emerges will surely rebalance the currently lop-sided nature of the Trump trade deals. But even after the most optimistic (for the US’s trade partners) revisions, it is likely to remain in favour of the US. In other words, Trump 2.0 may have conferred a big long-term advantage to the US in its international trade relations. 

The reshoring of manufacturing, in some form or other, is a train that has started. Multinational corporations have been forced into shedding their exclusively efficiency-maximising business models and adopting strategies that build resilience through supply chain diversification, ideally by reshoring to their home bases. The US economy will collect three to five times more revenue from tariffs (from the current monthly collection of about $8 billion, it’s already over $30 billion), and it’s likely to play an important role in financing the country’s burgeoning fiscal deficit. Unfortunately, these significant revenues once tasted by the US fiscal system will create incentives to perpetuate even after Trump leaves. 

A high-level perspective is that the world economy has enjoyed windfall gains since the 1990s from trade liberalisation and the WTO. Tariffs have fallen spectacularly to historic and, perhaps, undesirable lows. After all the sectoral and country-specific carve-outs and dispensations, and general renegotiations that will happen in the coming months, the Trump tariffs may calibrate tariffs to more realistic levels. That may be a good economic outcome. 

But there are many aspects of the other side of the ledger that are unmitigatedly bad for the US and its allies. For a start, the commitments given by countries on the purchase of US goods and investments in the US are most unlikely certain to not materialise in any meaningful manner. It’s most likely that all countries will drag their feet on these commitments, preferring to wait out the Donald Trump regime by allowing for some cosmetic and politically expedient wins for him. 

All the deals are filled with fantastical investment commitments, all of which are too impossible to comply with. Investment decisions are with corporates and are done purely on commercial considerations. No government (except perhaps the Chinese) can force its corporations to make investment commitments just to meet some national foreign policy obligations. And given the commercial viability challenges associated with reshoring manufacturing to the US, coupled with Trump’s whimsical nature, very few companies would be willing to bite the bullet. Besides, given that investment decisions can take years to materialise, countries and companies will wager that it’s a smart thing to make some vaguely worded “commitment” and get the tariffs out of the way. One can always renegotiate, if needed, or, more likely, Trump will move on to other things, and domestic political and geopolitical trends will dissipate the commitments. 

Ironically, the vagueness of the trade deals may have been the convenient escape clause that made it alright for countries to agree to deals with the US and present Trump with ego-boosting wins. The deal with EU is filled with feel-good triumphs with little substance. This article illustrates how the EU conceded on the (politically and substantively unimportant) imports of lobsters and bison meat but refused to concede on the more substantive issue of imports of hormone-raised beef and acid-washed chicken. 

Several of the incentives the European Union used to clinch the agreement may look like gifts, but if so, they are gifts unearthed from the back of the closet, dressed up in nice wrapping paper and topped with a fancy bow. They look good, but they did not cost Europe much. Take Europe’s promise to buy $750 billion in energy. That number is spread across three years, and it includes Europe’s existing purchases of American gas and oil, expected future additional purchases and anticipated investments in things like nuclear infrastructure by American companies in Europe. But while the European Commission, the bloc’s executive arm, can estimate how much European companies might spend, those decisions are up to the private sector. The European Union cannot force businesses to buy American energy if the math does not make sense. Likewise, the bloc’s promise to invest hundreds of billions of dollars in the United States is a tally of expected spending from European companies. It is simply an expectation of how much money could flow toward America, not even a commitment of how much will.

With time, they might get exposed as mere Pyrrhic victories that stoked the President’s vanity without achieving much in substance. 

The geopolitical consequences of these policies will be felt in the months ahead. Credibility and trust, built over decades of painstaking work, can erode spectacularly in a few months of flippancy, capricity, and unreason. Thanks to just six months of Trump 2.0, America may have significantly and irreversibly eroded its soft power in diplomacy and in shaping global institutions. The example of India-US strategic relationships (more later) is a case in point. 

Further, it has surely brought together other like-minded blocs and countries like the EU, non-US G7 economies, India, Japan, East Asian economies, Brazil, Mexico, and others in shaping global institutions in a manner that derisks them from not only China and Russia, but also the US. In areas like acceptance of the dollar as the reserve currency and reliance on the US-controlled SWIFT payments system, Trump 2.0 has surely set afoot efforts even among allies to diversify away from the control of the US. Similarly, efforts to create harmonised global regimes on areas like data localisation, AI, taxation of multinational corporations, green transition, and so on, are likely to further isolate the US from its allies. In simple terms, for the vast majority of countries, Trump 2.0 may have pushed the US into the group of antagonists currently populated by China and Russia. 

This mistrust of the US will get amplified as Trump expands his agenda beyond reshoring jobs and cutting trade deficits, to interfering in the domestic political issues of countries, like those happening with South Africa (supporting white settlers), Brazil (opposing the judicial process against Jair Bolsonaro), and Canada (opposing its moves to recognise Palestinian statehood). He has shown an increasing appetite to use the instrument of tariffs to meet not only economic goals but geopolitical and diplomative interests

A test case will be the outcome of the scheduled Trump talks with Putin in Alaska later this week, which threatens to divide Ukraine without its consent. In his vanity to claim credit for stopping the war, Trump may well agree to Putin’s demands that the US recognise the cession of Crimea and the Eastern Donbas region, and freeze the current battle lines as permanent boundaries. If something like this happens, Ukraine is unlikely to agree, and it may well be a defining moment in the US-EU relations. Indeed, the European Commission, France, Italy, the UK, Poland, and Finland have already issued a strongly worded statement that opposed any backroom deal done without Ukrainian representation that compromised Ukraine’s territorial integrity. 

The joint statement from the European Commission, France, Italy, the UK, Poland and Finland also said “the path to peace in Ukraine cannot be decided without Ukraine” ahead of a meeting next week between Trump and Russian President Vladimir Putin… Late on Saturday, the European leaders released a joint statement calling for “robust and credible security guarantees that enable Ukraine to effectively defend its sovereignty and territorial integrity”. It added that “we remain committed to the principle that international borders must not be changed by force”… There is particular anxiety that Trump could seek a quick resolution to the war by offering Putin territorial concessions, legitimising its illegal annexation of Crimea and occupation of huge parts of four mainland regions of Ukraine: Donetsk, Luhansk, Kherson and Zaporizhzhia.

The biggest surprise in Trump 2.0 to date has been his actions on China. What started with the big bang tariffs on China(amounting to the highest reciprocal tariffs) is now giving way to perplexing about-turns. For a person prone to instant provocation, he has been inexplicably considerate with the Chinese. He condoned China’s tit-for-tat retaliation on his tariffs and agreed to an interim deal that marked a sharp climb down in lowering the tariffs on China from 145% to 55% and allowing China to retain a 33% tariff on US exports. It’s almost like Xi Jinping is doing to Trump what he’s doing to all others!

It says something about the reversal of Trump’s initial aggression on China that the Trump administration has imposed higher tariffs on close allies like Canada, India, Taiwan and Switzerland than on China. 

More importantly, the interim trade deal ended up allowing the Chinese to link the relaxation of their newly introduced export restrictions on rare earth elements with those on Biden-era US export restrictions on Nvidia chips, instead of being confined to negotiating on lowering the succession of prohibitive tariffs. In simple terms, the Chinese got both lower tariffs and, more importantly, relaxation of export of Nvidia chips. Trump 2.0 and its scattershot tariff policies have taken the foot off the pedal in the Biden administration's strategy of progressively tightening access to strategically important technologies for China. 

There’s now the real danger that, in his desperation to clinch a high-profile trade deal with China, Trump may relax Biden’s 2024 ban on exports of high-bandwidth memory (HBM) chips. The Chinese appear to consider this more important than even the H20 chips since they seriously constrain the ability of their companies, like Huawei, to develop their own chips. Memory chips are a critical part of AI chips which package together memory and logic chip components. In order to avoid hurting trade talks, the Commerce Department has already been directed to freeze further technology export controls to China. He now appears to be veering towards allowing the sales of Nvidia’s advanced Blackwell chips, and all that for a 15% share of the revenue from their sales.

The refusal to allow Taiwanese President Lai Ching-te to transit through New York en route to Latin America to pre-empt the issue from becoming an impediment to any trade deal is a massive strategic concession that undermines deterrence in the Taiwan Straits and signals a desperation that would have pleasantly surprised and gladdened the Chinese. What does it say about Trump’s strategic priorities when he extends the tariff deadline for China, apparently America’s primary geopolitical rival, even as he slaps India, one of America’s main ally in Asia, with two successive 25% tariffs, which take the total tariffs on India to nearly double that on China (30%)?

Now, even as Trump has harshly penalised India for buying Russian oil, he seems to be turning a blind eye to China, despite it being the single largest buyer of Russian oil since the Ukraine invasion and the second largest current buyer. More inexplicably, if punishing Russia is his objective, Trump appears not to be even concerned about the fact that China does far, far more to prop up the Putin regime than anything anybody else may be doing. 

For all these reasons and more, I agree with Edward Luce, who has described Trump as the “last China dove in Washington”. 

In the final analysis, I think there are only two bulwarks against Trump 2.0. The strongest bulwark is still the financial markets, especially the bond markets. The bond vigilantes can pile pressure on the dollar and, more importantly, drive up borrowing costs for the US government, and its corporates and households. As we have already seen, a poor response to a Treasury Bond auction can spook the markets as a whole and force hard choices on even Donald Trump. As an example, the bond market reaction to Treasury auctions was an important contributor to Trump pausing his exorbitant reciprocal tariffs in April 2025. The equity markets don’t have a similar restraining effect on Trump. 

The other restraining force is that of the elites in corporate America. It’s no surprise that even amidst all the tariff increases, the likes of Apple and Nvidia have managed to obtain carve-outs, sparing them not only from the worst of the tariffs but even carry out business as usual. This is a good description of how lobbying to protect Nvidia’s commercial interests trumped even strong opposition on concerns about compromising national interests. 

The H20 has become the focus of a debate between security officials who say allowing China to buy the H20 will help its military. But Nvidia argues that blocking US technology exports forces China to accelerate innovation. The Financial Times reported last week that 20 security experts, including Matt Pottinger, deputy national security adviser in the first Trump administration, and David Feith, who served at the National Security Council earlier this year, wrote to commerce secretary Howard Lutnick to urge him not to allow H20 sales to China. In the letter, the security officials said the move would be a “strategic mis-step that endangers the United States’ economic and military edge in artificial intelligence”.

Nvidia countered that the criticism was “misguided” and rejected the argument that China could use the H20 to enhance its military capabilities. Nvidia took a $4.5bn hit in the July quarter, as well as an additional $2.5bn in missed sales, after the White House introduced the original licence requirement… It was viewed as a ban that would kill the legal sale of Nvidia’s AI chips in China, cutting the company off from a market that Huang has said will hit $50bn in the next two to three years. The company had forecast an $8bn loss in China revenue for the July quarter.

Trump policies on deregulation, taxation, and economic diplomacy have promoted the interests of Big Tech and Big Finance. All talk of draining the swamp and clearing powerful entrenched interests in Washington has gone out of the window. While they may be willing to concede on secondary issues, when their core interests are threatened, it’s most likely that elite corporate interests will lock arms and resist. Besides, Trump himself, being a member of the elite corporate interests, would not go beyond a certain line in draining the swamp.

Among all countries, the difference between the expectations (at least in India) and reality from Trump 2.0 to date may well be the greatest for India. It was expected that Trump 2.0 would help cement the anti-China alliance between India and the US, and India would enjoy the collateral benefits from the US squeeze on China. Besides, it was believed that the natural affinities and other factors would help forge a tight relationship between the two countries. Unfortunately, for whatever reason, things have gone astray. 

While the tariffs are very high and doubtless economically damaging for India, I’m inclined to feel that it is likely that their effects are being overestimated. For a start, there are several carve-outs, and they will most likely only increase over time as interest groups emerge in the US and start lobbying, and the tariffs themselves will most likely get renegotiated downwards. For example, a Trump-Putin deal later this week can eliminate the 25% punitive tariff. As to the other 25%, the supply chains will recalibrate to absorb some of the tariffs, reroute exports to the US through other countries, and figure out alternative markets. At worst, the Indian economy will slow down by about a percentage point for a year or two. But it may also be the much-needed kick up the butt to double down on domestic manufacturing. 

Instead, the more damaging problem for India from Trump tariffs is likely to be its impact on the foreign investment climate. At a time when the trend of decoupling from China is at its peak, multinational corporations are evaluating choices to diversify their supply chains. Given its large economy and potential for scale manufacturing, India would be among the frontrunners for most corporations looking to relocate from China. But the very high tariffs will undoubtedly be a significant dampener on the preference for India. 

For example, if the uncertainty persists, would Apple go full hog (as it appears inclined now) with making India its alternative to China as the preferred manufacturing base? It is more likely that it’ll forego a share of its unreasonably high profits and reshore significant parts of the iPhone supply chain to the US and neighbouring countries like Mexico. Further, at higher tariffs, countries like Vietnam, Bangladesh, Mexico, and Indonesia become more attractive for companies relocating out of China. 

An even bigger threat for India will be if Trump turns his gaze on the services sector. One of the original grievances of the MAGA base is that of foreign migrants and services outsourcing taking away Americans’ jobs in the IT industry. India is especially vulnerable on this issue and to any punitive actions in these directions. 

Already, Republican Congresswoman and Trump supporter, Marjorie Taylor Greene has called for ending H1B visas to Indians to punish India for buying Russian oil. The MAGA originals, led by Steve Bannon, have already made their opposition to H1B visas very clear, and they have also opposed US technology firms offshoring services to countries like India. In fact, this view may even have bipartisan consensus among populists on the right and the left. Given how far Trump has shown willingness to go with his protect American jobs agenda, it’s most likely that at some time during the next few months, there will be something that will trigger a backlash against not only H1B visas but the outsourcing of IT services sector jobs to India in the form of Global Capability Centres (GCCs). 

Any actions on this front by Trump will have a strong adverse impact on India. India must work the backdoors quietly with the US Big Tech firms, whose interests would be hurt by these measures, to avoid these scenarios. Like Tim Cookand Jensen Huang, it must create the conditions for quiet lobbying by the technology firms to prevent any such eventuality. In the early days of the Trump 2.0 administration, a public dog-fight on this issue was staved off because influential voices on the elite corporate side in the US stepped in to counter the MAGA originalists. This issue can erupt anytime, and a Trump who’s antagonised with India may well flip to the other side this time. 

In this backdrop, India would do well to adopt Deng Xiaoping’s famous aphorism that China follow the principle of “bide your time, hide your strength” (tāo guāng yǎng huì) during its growth phase. While always a prudent thing to do for a rising power, this approach assumes even greater relevance in times of Donald Trump and rising trade protectionism. National interests, especially when involving populist concerns, are best protected quietly. In any case, foreign policy is best conducted discreetly and away from the glare of media attention, much less the hyper-sensationalising modern social media. 

Instead of being caught up excessively with speculations centering exclusively around ego slights, India would also do well to pay close attention to the purely transactional nature of Trump’s foreign policy actions. 

For example, as David Woo has argued, there’s a compelling argument that the punitive tariff on India for importing Russian oil is part of the larger effort to force Russia to the negotiating table on Ukraine. Though Trump had prioritised the ending of “Biden’s war” in Ukraine, Putin’s intransigence had made the deal elusive. Woo argues that the EU may have agreed to the 15% trade deal also in return for the US pressuring Putin to end the war, and accordingly, in its aftermath, Trump shortened the deadline for Russia from 50 days to 10 days (August 8). Knowing that squeezing oil revenues is the “cheapest and easiest way to weaken Russia”, and that pressuring China was off the table, India (its Russian oil imports) may have become an easy soft target to pressure Russia into ending the war. India may well be collateral damage in Trump’s illusion of stitching together a grand bargain and claiming credit for ending the Ukraine war. Woo also says that given the certainty of a significant knock-on effect on global oil prices from India even looking to replace the 1.6-1.8 million barrels it imports from Russia, there’s a strong likelihood of a TACO round the corner. 

The same transactional approach may be behind his sudden warming up to Pakistan. The trigger may well have been Iran, where Pakistan appears to have positioned itself as a partner to advance America’s interests. It has also offered the prospect of being a bitcoin mining hub, a source of rare earths, opening to US oil companies for oil exploration, and perhaps even being an intermediary between the US and China. All these, coupled with the support for a Nobel Peace Prize for Donald Trump and smart tactical positioning, appear to have swung Trump to strike a deal that lowered its tariffs from the interim rate of 29% to 19%.

The worrying thing for allies like India is the extent to which Trump is willing to take his transactionality approach in foreign policy. Despite being strategic allies, India and the US have had disagreements on one another’s relationships with third countries. Just as the US is displeased with India’s closeness to Russia, India has even greater reasons to be worried about America’s engagements with China and Pakistan. But both, including during Trump 1.0, have consciously agreed to live with these disagreements and avoid letting their serious differences come in the way of the deepening strategic relationship. As Evan Feigenbaum has said, Trump’s recent actions may have definitively destroyed that trust. 

It’s a universal truth that with bullies, one must stand the ground or be bullied. Conceding to Trump’s demands and actions will certainly be seen as a sign of weakness and risks further entrenching the already existing belief in him that, in his games involving the big powers, India, being the softest target, can be compromised. This does not mean standing up to him loudly and aggressively through public posturing and tit-for-tat responses, as appears to be the strategy adopted by both Brazil and China, but being quietly firm in its actions and diplomatic communications. It should be supplemented with subtly delivered signals on policies and decisions on procurements and investments that are a reminder of the economic levers available to India. 

The, by now, self-evident flippancy and whimsical nature of Trump’s policies should be a reminder to all those who thought that Trump would be favourable to India’s interests. A late 2024 poll by the European Council on Foreign Relations found that 84% of Indians believed Trump was beneficial for India, the highest percentage among 24 countries. This expectation was formed by narratives that had little evidence base. 

In fact, even a cursory reading of the totality of his actions should have been proof enough that Trump has no ideology, and nobody can count Donald Trump as a friend. Trump’s America First and trade deficit focus, the transactional nature of his actions, and his preference to conduct foreign policy through Truth Social and media briefings must have been sufficient to point to the strong possibility of difficulties surfacing in the relationship. In conclusion, Trump is purely transactional, and it’s only one news story or ego bruise for Trump to reverse course from seeing a country as a friend to making it a villain. 

Robert Zoellick, the former USTR and World Bank President, says it best;

“Trump is not fundamentally about policy. He’s about dealmaking and transactionalism and he has recognised that the United States has tremendous economic power and that tariffs are leverage and a way of showing dominance.”

Even worse, he does not mind the selective application of tariffs to certain countries on the same thing (punish Canada with 35% tariffs for moving to recognise Palestine, while ignoring France and UK; or punish India with 25% tariffs for purchasing Russian oil, while ignoring China’s greater purchases). Or, he may not be bound by any of his own deals and appears willing to tear them down if some new rationale or expediency emerges! The Tariff Man is the Transaction Man!

Saturday, August 9, 2025

Weekend reading links

1. Impact of Trump tariffs, car manufacturing edition.
Ahead of Trump’s self-imposed August 1 deadline to slap even higher tariffs on trading partners, the US has signed a flurry of trade deals with the EU, Japan and South Korea that have brought down the tariff rate on cars to 15 per cent. Yet as of Friday, Mexico and Canada, which have highly integrated automotive supply chains with the US through a 2020 USMCA trade agreement, have not reached new deals with Trump. That means cars produced in those two countries would have a higher overall tariff of 27.5 per cent than those built in Japan, the EU or South Korea. Antonio Filosa, the new CEO of Stellantis, which owns the Fiat, Jeep and Opel brands, pointed out to investors that 8mn of the 16mn vehicles sold in the US each year are built at plants in Mexico and Canada using many components from US suppliers. Meanwhile, he added that the other 4mn units that come from Europe and Asia have “virtually zero US content”... 

Car parts from Mexico and Canada, for example, that comply with the rules of the USMCA trade agreement created under the first Trump administration in 2020 are tariff-free, while non-compliant vehicles will face a maximum tariff of 25 per cent. Complete vehicles compliant with the USMCA will have the 25 per cent tariff applied only to their non-US parts content. The administration is also offering those that assemble their vehicles in the US small rebates — up to 3.75 per cent of the retail value of the car for the next year — to offset the cost of the levies. When all of these factors are applied, the average tariff cost per vehicle for cars imported from the EU, South Korea or Japan would be around $5,600 — higher than the $4,900 for vehicles imported from Canada and Mexico, according to Erin Keating, executive analyst at Cox Automotive, a car services and data group.

Updated primer on Trump tariffs

2. Future of India's IT sector job hiring?

Between 2021 and 2025, average bench size (workers on payroll but not assigned to any billable projects) has shrunk from 15–20% to less than 10%, according to data from Teamlease. Meanwhile time on the bench has reduced from 45–60 days to 35–45. Companies are also moving from bulk hiring to an on-tap model—which means they’re hiring only the bare minimum required for current projects.

This is coupled with salary stagnation.

3. Indian youth's civil services obsession in a graphic.

In the decade up to FY23, the latest year for which data is available, the number of applicants for the preliminary exam more than doubled, to 1.1 million. But the number of applicants fighting for each vacancy almost tripled. The surge is startling, especially when the ranks of new college graduates only expanded 40% in roughly the same period.

4. Lenskart is going global. Will it be the first global Indian consumer brand?

The company now operates 656 stores outside India, which together pull in around 40% of its total revenue. Its footprint is sprawling, including 28 subsidiaries, two joint ventures, and three associate companies spanning 14 countries... It wants to be the Essilorluxottica of the east, the company behind eyewear giants like Ray-Ban and Oakley, but with the agility of a digital-first, vertically integrated brand... What gave Lenskart a unique edge was partnering with or acquiring local players. Instead of spending millions building ground-up... 

Since setting foot abroad in 2019, the company has acquired Japanese eyewear brand Owndays, and made strategic investments in San Francisco-based immersive product visualisation startup Metadome, Israel-based 6Over6 that develops AI-powered solutions for the optical industry, and France’s Le Petit Lunetier. It has even set up a joint venture Bao Feng Framekart in China to manufacture frames... Late in July, the Indian multinational eyewear company acquired an 80% stake in Spanish fashion-eyewear brand Meller for Rs 407 crore... Lenskart’s entry into Paris that year with a 29% stake in French eyewear brand Le Petit Lunetier.

But it still has some way to go before it can compete with global leaders. 

And fortunately, it's making India its manufacturing hub.

The company currently runs two manufacturing facilities in India—in Gurugram, Haryana and Bhiwadi, Rajasthan—with a third plant in the works in Telangana. Apart from this, it also has plants in Singapore, the UAE, and China (through a JV). It’s also building a greenfield manufacturing facility with an investment of Rs 1,500 crore to expand frame production at its Bhiwadi unit. Together, this means that a majority of Lenskart’s global manufacturing happens in India. Apart from the obvious cost savings of such an arrangement, it brings production close to the teams that design and engineer the eyeglasses—leading to improved delivery times and tight quality control.

It has some serious competitive advantages.

The real moat is vertical integration, according to the senior analyst from Crisil. Lenskart controls everything from manufacturing, to omni-channel delivery, to customer support. This is the perfect leverage, bolstering its pricing power, agility in product launches, and consistency across markets, added the analyst. It also helps that prescription glasses are Lenskart’s bread and butter, comprising 80% of its revenue. As anyone who wears them knows, these aren’t impulse buys; they’re healthcare essentials. Which means margins are healthy, replacements are predictable, and customer loyalty is high.

5. Milan's property boom has brought in its wake allegations of corruption in the real estate sector. The transformation has been spectacular. 

Two decades ago the drab suburban district north-east of central Milan — once characterised by railway yards and factories making Pirelli tyres and Breda steel — was so desolate and plagued with crime that regular Milanese would never think to visit. Today it is the city’s most exclusive neighbourhood, home to global bankers and billionaires. Its curved and gleaming UniCredit tower was designed by the late architect César Pelli, renowned for Kuala Lumpur’s Petronas towers. Nearby is the Bosco Verticale, a pair of skyscrapers where apartments sell for up to €25mn to private equity executives, footballers and Middle Eastern investors. The glitzy Porta Nuova district was masterminded in large part by one man: Manfredi Catella, who led the Italian arm of US property asset manager Hines, then acquired the former Hines division through his family’s real estate vehicle Coima in 2015, building up the district with backing from Qatar’s sovereign wealth fund.

Its origins are less than a decade old. 

In 2015 Milan hosted the Universal Exposition, seizing the chance to demonstrate that the once provincial and austere financial capital of Italy was morphing into a vibrant global city, thanks in large part to the 340,000-square-metre urban regeneration plan. Since the Expo, whose director-general was Sala, the city’s property market has attracted €30bn in investment and thousands of wealthy international residents, lured to Italy by generous tax breaks. Since 2016 Italy has offered new residents a flat-tax charge on unlimited overseas income, a fee that rose from an annual €100,000 to €200,000 last year. The country has enticed wealthy expats who deserted the UK after its Labour government last year scrapped the popular “non-dom” regime, which offered residents whose permanent home was abroad up to 15 years without paying tax on money held overseas. Expats were drawn to Milan for its convenient location at the foot of the Alps and its dolce vita lifestyle. New London-style members’ clubs, such as Casa Cipriani and The Wilde, housed in Santo Versace’s old mansion, and lavish restaurants launched to cater for the new arrivals, who poured money into its real estate market. Milan is due to hold the Winter Olympics next year; Coima teamed up with Prada Holding, controlled by the fashion family, to build the Olympic Village at the Scalo di Porta Romana, a former railway yard across from Prada’s suburban headquarters.

The breakneck pace of property development has exposed a corrupt nexus between politicians, local officials, and real estate developers. 

This week Milanese prosecutors called Catella’s dream into question. They demanded he be placed under house arrest alongside five other people — including a city councillor — involved in the city’s redevelopment. Another 15 individuals, including mayor Giuseppe Sala, are under investigation as part of a sprawling probe into Milan’s rapid real estate expansion... prosecutors allege the Coima boss bribed public officials to obtain fast-tracked building permits that overlooked rules governing the height of buildings and their impact on the landscape. The investigation “uncovered a system whose purpose is to facilitate the issuance of illegal building permits for the realisation of highly speculative real estate transactions”, the document said.

See also this.

6. This is a stunning fact about the scale of data centre investments and its impact on the economy.

Spending on data centres means the firms (Alphabet, Meta and Microsoft) possess property and equipment (accounting-speak for hard assets) worth more than 60% of their equity book value, up from 20% over the same period. Add the capital expenditure of these firms during the past year to that of Amazon and Oracle, two more tech giants, and the sum is greater than the outlay of all America’s listed industrial companies combined. Jason Thomas of Carlyle, an investment firm, estimates that the spending boom was responsible for a third of America’s economic growth during the most recent quarter. This year companies will spend $400bn on the infrastructure needed to run artificial-intelligence (AI) models. Predictions of the eventual bill are uniformly enormous. Analysts at Morgan Stanley reckon $2.9trn will be spent on data centres and related infrastructure by the end of 2028; consultants at McKinsey put it at $6.7trn by 2030...
Since 2023 Alphabet, Meta and Microsoft have divided $800bn of operating cashflows roughly evenly between capex and shareholder returns. This goldilocks capital allocation, which combines a building boom with a trip to the bank, is unprecedented even among their own ranks. Amazon’s shareholders are paying for huge capex bills but have been starved of returns; Apple investors have benefited from vast share buy-backs but are worried that the company’s lack of investment means it is falling behind on AI. But capex is growing faster than cashflows. Morgan Stanley’s calculations indicate a $1.5trn “financing gap” between the two over the next three years. It could be bigger if advances in the technology escalate spending further and kill existing cash cows. Conversely, if companies are slower to adopt AI than consumers, big tech will struggle to earn a quick return on its investment; shareholders might then demand a greater portion of their earnings to compensate for this sluggish growth.

But this capex boom is increasingly being funded by credit, not from banks, but from private equity investors in the form of private credit.

During the first half of the year investment-grade borrowing by tech firms was 70% higher than in the first six months of 2024. In April Alphabet issued bonds for the first time since 2020. Microsoft has reduced its cash pile but its finance leases—a type of debt mostly related to data centres—nearly tripled since 2023, to $46bn (a further $93bn of such liabilities are not yet on its balance-sheet). Meta is in talks to borrow around $30bn from private-credit lenders including Apollo, Brookfield and Carlyle. The market for debt securities backed by borrowing related to data centres, where liabilities are pooled and sliced up in a way similar to mortgage bonds, has grown from almost nothing in 2018 to around $50bn today... 

CoreWeave, an ai cloud firm, has borrowed liberally from private-credit funds and bond investors to buy chips from Nvidia. Fluidstack, another cloud-computing startup, is also borrowing heavily, using its chips as collateral. SoftBank, a Japanese firm, is financing its share of a giant partnership with Openai, the maker of Chatgpt, with debt... After raising $5bn of debt earlier this year xai, Mr Musk’s own startup, is reportedly borrowing $12bn to buy chips... Private-equity firms are refashioning themselves as lenders to the real economy... Data centres produce large amounts of debt. This sits easily on the huge balance-sheets managed by these outfits, which are often funded by life-insurance policies... For some it is also a warning sign. Lenders may find themselves taking technology risk, as well as the default and interest-rate risks to which they are accustomed... Capex booms frequently lead to overbuilding, which leads to bankruptcies when returns fall. Equity investors can weather such a crash. The sorts of leveraged investors, such as banks and life insurers, who hold highly rated debt they believe to be safe, cannot.

7. Nepal is on the fast track of EV adoption. 

Over the past year, electric vehicles accounted for 76 percent of all passenger vehicles and half of the light commercial vehicles sold in Nepal. Five years ago, that number was essentially zero. The E.V. market share in Nepal is now behind only those of a few countries, including Norway, Singapore and Ethiopia. The average for all countries was 20 percent in 2024. The swift turnover is the result of government policies aimed at leveraging Nepal’s wealth of hydropower, easing dependence on imported fossil fuels and clearing the smog. It has been fed by an intense push from Nepal’s biggest neighbor, China, the world’s dominant manufacturer of battery-powered vehicles.

8. India's consumption class captured in a graphic.

Only a tiny proportion of the market demand is for branded eggs. This share is 70% in developed countries. 

9. One more illustration of how DJT is being inexplicably soft on China at the cost of its own allies. 

“China — not India — is the largest buyer of Russian oil. In 2024, China imported $62.6 billion worth of Russian oil, compared to India’s $52.7 billion. But Mr Trump appears unwilling to criticise China, perhaps because of geopolitical calculations, and instead targets India unfairly,” think tank GTRI said.

10. Edward Luce is spot on about Trump being the "last China dove in Washington" and, unfortunately, "his is the only voice that counts". 

11. Worker attrition in manufacturing jobs.

Long-distance migration is not easy, especially if it involves moving from an informal and flexible work environment to the strict discipline of factories. Attrition is alarmingly high, with over half of contract workers leaving within a year, according to staffing firm Teamlease; about a tenth of labourers drop off within the first three months of joining, it added... India had about 68.5 million manufacturing jobs in 2022-23, according to household survey estimates analyzed by Data For India... The reasons for high factory attrition are complex and manifold. Factory owners have heard it all: frustration over long hours, strict factory operating procedures, homesickness, inability to adjust to a new state’s cuisine, long commutes, and poor accommodation, especially on the outskirts, where factories are located. Sometimes, workers don’t have the money to survive the first month before their salaries hit their bank accounts.
12. The Warren Buffet premium enjoyed by Berkshire Hathway stock.
Buffett is in the home stretch of a six-decade tour de force atop Berkshire, transforming a struggling textile mill into a financial conglomerate spanning sectors from insurance to natural gas pipelines. His returns, built on a buy-and-hold, value-driven strategy since he took over Berkshire in 1965, have outperformed the benchmark S&P 500 by more than 5mn percentage points.

The premium is now at the risk of disappearing as Buffet prepares to stand down, dragging down Berkshire shares in recent weeks.

13. Russian exports to EU.

14. Janan Ganesh feels that we are at "peak Trump".
In all likelihood, this summer is Trump’s peak. Life for the US president goes downhill from here. For one thing, inflation is going to rise. To an extent, it already has. If prices haven’t gone up faster and earlier, that is because some businesses stocked up on inventory from abroad before the tariffs set in. Others chose to absorb the increase in costs for a while rather than pass it on to customers. Neither of these cushions will be there for long... Other things being equal, tariffs on this scale should lead to higher prices over time... public sentiment is about to edge left again, especially if Trump overdoes the deportations and the crusade against universities. It is not that Christian nationalists are going to convert to the teachings of Michel Foucault. Rather, voters in the middle who gave Trump a reluctant go might decide, “This is too much”, and tilt the other way... The right’s moment of cultural leadership, in which Sydney Sweeney can make a conservative-coded advertisement for some jeans, and perhaps some genes, is likely fleeting.

15. India's Russian oil imports problem might become a general petroleum trade problem.

India buys about 90 per cent of its crude oil from overseas and has been the biggest market for Russian seaborne crude since 2023, according to ship tracking data compiled by Kpler. India imports about 5mn barrels of oil a day, of which 2mn come from Russia. “Where would India find 2mn barrels a day of crude just like that?,” said Sumit Ritolia, a lead Kpler analyst... A sudden halt of Indian purchases of Russian oil could also affect global markets. Premasish Das, head of analysis of oil markets in Asia at S&P Global Commodity Insights, said if India suddenly turned to other suppliers, it would create “a significant tightness into the market”, potentially pushing the price of crude to more than $80 a barrel, from current levels of about $67.
See this as Trump imposes an additional 25% tariffs on India. Interesting that the standout second largest buyer of Russian crude, China, gets away with nothing. 
16. Amidst the sacking of its Director by President Trump, the US BLS is facing several serious technical challenges. For one there's the increasing share of prices data is not directly observed.
A rising number of prices collated as part of the CPI report are no longer directly observed by the BLS’s field staff. This has lifted the proportion of data points in which the value of an item in one city is used to estimate another to 35 per cent in June, from 10 per cent at the start of 2025.
Survey response rates have declined sharply since the pandemic.
Then there's the issue of shrinking budgets and workforce.
These issues have come at a time when the BLS is facing a funding crunch, with a Department of Labor document showing the agency is facing an 8 per cent budget cut next year. It will also have to do its job with more than 150 fewer staff, according to the projections, bringing the total to about 1,850. Former and current staff say the workforce reduction is likely to worsen data standards and delays. The Quarterly Census of Employment and Wages, a vast and detailed survey of the US labour market, is already being published with longer lag times. Labour-intensive data collection, in particular, has become harder as the BLS’s workforce shrinks.