’Either stock markets are stupid or…’: Deepak Shenoy on rally in Chinese shares even as Trump raises tariffs to 125%
As the Chinese stock markets rallied in the face of sweeping tariffs by US President Donald Trump, Capitalmind founder and CEO Deepak Shenoy in a post on X (formerly Twitter) quipped, “Either stock markets are stupid or Chinese products are still gonna make their way to the US anyhow.”
Shenoy’s comments come as China’s stock market jumped nearly 2% and the Hong Kong Hang Seng index surged 4%, even as the US raised tariffs on the world’s second-largest economy to a whopping 125%, escalating trade war worries. At the same time, Trump also announced reduced 10% tariffs for the next three months for most other countries.
This move, according to Shenoy, will only allow China to export goods to the US via other countries.
“Trump reduces tariffs to 10% for 3 months except for china which gets 125%. Nice try but there isn’t that much leverage here, china simply cannot be avoided and Trump has opened the door for china to send its stuff through other countries,” Shenoy said in another post on X.
China is one of the top suppliers of goods to the United States, importing goods worth $439 billion in 2024. Raised tariffs on Chinese imports will make goods pricier for US consumers and push inflation up. For now, Shenoy said Trump has saved Americans from paying a heck of a lot more from tomorrow.
However, further added that China can still squeeze out America by not exporting. “Other countries know this, so watch out as they measure their reactions,” Shenoy said.
Meanwhile, another factor that has aided the rally in Chinese stocks is the hopes of a stimulus support from Beijing as well as hopes for a possible trade deal with the US, said a Reuters report.
China’s top leaders are poised to meet Thursday to discuss additional economic stimulus after Trump ratcheted up tariffs, Bloomberg News reported. The Chinese yuan also dropped to its lowest level against the US dollar since the 2008 financial crisis on Thursday. This shows that investors expect Beijing to loosen its monetary policy soon. The weaker currency also suggests that Chinese officials are more willing to let the yuan fall in value to help soften the impact of the growing trade war.
Great Time for Make in India?
While Trump’s tariff policies have ignited a global trade war, Shenoy believes now is a great time for Make In India, a government policy that pushes for domestic manufacturing to reduce cheap imports from countries like China and Bangladesh.
“The end game is not US centric; no one trust them anymore. It’s now simply to be as self sufficient as possible, for countries like India,” Shenoy said as he championed for reducing India’s import bill.
“I hate to say this, but this is great for Make in India. Not to make for the US, but to make for India. Should reduce Chinese imports and reduce over dependence on US exports too,” Shenoy added.
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