Trump likely to back off from high tariffs, stay invested in India, Says by Jefferies

US brokerage company Jefferies has urged its clients to invest in Indian shares instead of offloading them, stating that President Donald Trump's tariff policies are unsustainable and will be reversed, reported a study published on Monday.

Jefferies' senior analyst Christopher Wood said India continues to be one of the company's strongest recommendations in the current global market environment and the probability of a change in U.S. trade policy. "It is only a matter of time before Trump reverses the stance, which is not in America's interest. On this aspect, it is worth mentioning that the record speaks for itself that it is worthwhile standing up to the Donald," Wood said.

He warned that the actions of Washington against big economies may drive BRICS members — Brazil, Russia, India, China and South Africa — towards de-dollarisation, where nations clear trades in a currency other than the U.S. dollar.

Jefferies has historically been overweight Indian markets in its Asia ex-Japan universe. The latest report conceded, though, that India has suffered its longest period of underperformance relative to emerging-market peers in 15 years. Nevertheless, the company has stuck with a "marginal Overweight" recommendation on India.

"India is the best structural story in Asia over the long term," said Wood, although he added that markets are confronting "high valuations and huge equity supply."

Indian equities now cost 20.2 times one-year ahead earnings, down from a peak of 22.4 times in October 2021.

Wood also opined that BRICS renewed alignment is partially a product of what he called the U.S. administration's failure to have a coherent foreign-policy framework.

In the meantime, a U.S. trade delegation visit to New Delhi initially scheduled for August 25–29 has been reported as being in jeopardy of being cancelled. Trade ties between Washington and New Delhi have soured following a 25 percent tariff imposition by the U.S. on Indian imports and a threat to increase another 25 percent duty starting August 27.