On August 27, 2025, the global economic landscape shifted dramatically as two major events unfolded: the United States, under President Donald Trump, imposed a sweeping 50% tariff on Indian goods, and simultaneously, the U.S. government took a 9.9% ownership stake in tech giant Intel. These moves, emblematic of a new era of economic statecraft, have sent ripples through international markets, prompting both anxiety and opportunity for investors, policymakers, and businesses worldwide.
For India, the sudden imposition of tariffs was a seismic blow. According to AInvest, sectors most reliant on U.S. exports—such as textiles, gems and jewellery, and seafood—now face a projected 75% drop in exports to the American market. The textile and jewellery industries, in particular, are bracing for a 70% decline, threatening jobs and livelihoods across the subcontinent. The tariffs, framed by Trump as a response to India’s continued imports of Russian oil, laid bare the vulnerabilities of an export-dependent economic model.
Yet, adversity has spurred innovation. Prime Minister Narendra Modi’s administration quickly pivoted, launching the “Swadeshi” campaign to stoke domestic consumption. This initiative combines tax cuts, simplified GST rates, and incentives for local manufacturers—measures designed to boost internal demand and lessen reliance on foreign markets. As AInvest reports, India’s domestic consumption already accounts for over 60% of its GDP, offering a resilient buffer against external shocks.
But India isn’t just looking inward. The government is aggressively pursuing geographic diversification, targeting 50 new export destinations, including the UK, Japan, and South Korea. Free Trade Agreements (FTAs) are in the works with the UK, the Eurasian Economic Union (EAEU), and the European Free Trade Association (EFTA), aiming to secure duty-free access and mitigate the pain of lost U.S. sales. Notably, exports to the UAE have already grown by 12% year-on-year in 2024, according to AInvest, signaling early success in this multi-polar approach.
Sectoral repositioning is also underway. While traditional export sectors reel, others are thriving. India’s fintech sector, buoyed by an 87% adoption rate and 185 billion UPI transactions in 2024, is projected to skyrocket from $145 billion to a staggering $2.1 trillion by 2030. Healthcare and pharmaceuticals, tariff-free and globally competitive, are expected to grow at a 5.92% compound annual rate, reaching $88.86 billion by 2030. Renewable energy is another bright spot: with capacity hitting 209.44 GW in 2024 and a target of 500 GW by 2030, this sector is expanding at 8.7% annually. Electric vehicles, too, are surging—sales jumped 20% in 2024, thanks to government incentives and foreign direct investment.
For investors, these shifts present both challenges and openings. AInvest recommends a “barbell” strategy: allocate part of portfolios to high-growth domestic sectors like fintech and electric vehicles, while balancing with defensive assets such as pharmaceuticals and gold. Companies like PhonePe and Paytm are leveraging UPI to expand financial inclusion, while e-commerce platforms Flipkart and Meesho ride a 7% retail market growth wave. In healthcare, giants like Cipla and Dr. Reddy’s Laboratories are expanding their global generic drug portfolios. Renewable energy leaders Adani Green Energy and Tata Motors, meanwhile, are well-positioned to capitalize on India’s ambitious targets.
However, the risks are real. Geopolitical volatility—especially if U.S.-India tensions escalate—could disrupt trade further. Domestically, the success of GST reforms and the Production Linked Incentive (PLI) schemes hinges on efficient implementation. India’s demographic dividend, with 80 million new working-age individuals expected by 2035, could be a boon or a burden depending on policy execution.
Across the Pacific, the United States is charting a bold, controversial new course in industrial policy. On the same day as the India tariffs, the Trump administration announced a 9.9% stake in Intel, converting $11.1 billion in previously issued funds into equity. Commerce Secretary Howard Lutnick, speaking to CNBC, hinted that defense contractors like Lockheed Martin—who derive 97% of their revenue from the U.S. government—could be next. “There’s a lot of talking that needs to be had about how do we finance our munitions acquisitions,” Lutnick said, suggesting a broader embrace of public-private partnerships.
This summer has seen a flurry of similar interventions: a “golden share” in U.S. Steel’s acquisition by Japan’s Nippon Steel, a 15% stake in rare earth miner MP Materials, and a deal to take 15% of Nvidia and AMD’s chip sales revenue to China. Bloomberg described it as “a new brand of economic statecraft.”
The Intel stake, in particular, has stirred heated debate. Businessman Kevin O’Leary, typically a Trump supporter, told CNBC, “I abhor this idea, I really do. What has made America so great for 200 years is the government stays in its lane.” North Carolina Senator Thom Tillis compared the move to “a semi-state-owned enterprise as seen in communist China,” while Kentucky’s Rand Paul asked pointedly on social media, “If socialism is government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?”
Yet, the policy has found support across the aisle. Senator Bernie Sanders argued, “If microchip companies make a profit from the generous grants they receive from the federal government, the taxpayers of America have a right to a reasonable return on that investment.” Commerce Secretary Lutnick echoed this sentiment, contrasting the new approach with the Biden administration’s CHIPS and Science Act, which he called “just a giveaway of money.” Lutnick added, “Most countries in this world subsidize their most important industries,” referencing the UK’s recent efforts to reclaim British Steel.
Some see strategic foresight in these moves. Daniel McCarthy, editor-at-large of the American Conservative, noted that the administration is “keeping the United States competitive with other nations in the 21st century, including Communist China, which controls the world’s second- and third-largest sovereign wealth funds.” Trump himself, when asked about the ideological shift, replied, “Sure it is. I want to try to get as much as I can. I hope I’m going to have many more cases like it.”
However, critics warn of mounting risks. Vance Gunn, a former economic policy official, decried the approach as “corporate socialism—profits privatized, losses socialized and taxpayers held hostage to the fortunes of politically connected firms.” The National Review’s editorial board pointed to the nation’s $37 trillion debt and $2 trillion deficit, arguing the government “has no business playing investment manager with even more borrowed money.”
There are also concerns about market distortion. Scott Lincicome of the Cato Institute cautioned in the Washington Post that tech firms might feel pressured to buy Intel products “not because they represent the best technology, but to curry favour with or avoid being targeted by an administration that has a direct financial and political interest in Intel’s success.” Intel itself warned in a securities filing that significant government ownership could expose it to new regulations and restrictions abroad, especially since 76% of its revenue last year came from outside the U.S., with 29% from China.
In this turbulent environment, both India and the U.S. are rewriting the rules of engagement—sometimes in parallel, sometimes in opposition. For investors and businesses, the message is clear: resilience and adaptability are now the watchwords. Whether navigating tariffs, government stakes, or shifting alliances, those who can pivot quickly stand the best chance of thriving in this new era of global economic realignment.
