"Bigger Force Than Trump": Investor Ruchir Sharma To NDTV On AI, Tariffs

While US President Donald Trump's tariff wars have roiled global markets, a "bigger force than Trump" is shaping the American and world economies in the form of artificial intelligence (AI), according to global investor, author and founder Ruchir Sharma. 

Speaking in an interview with NDTV's Editor-In-Chief Rahul Kanwal, Sharma said the impact of AI on the US economy had effectively "out-Trumped Trump." 

Sharma's comments come as Trump once again defends his tariff strategy.  Trump imposed 25 per cent reciprocal tariffs on India, with an additional 25 per cent tied to Delhi's purchases of Russian oil, a move India described as "unfair, unjustified and unreasonable."

"There's a bigger force than Trump," Sharma told NDTV. "So I don't think Trump has backed down. This is a big illusion out there, that all because Trump took a series of actions, there's been some back down, but there's not been a big back down. The tariff rates have still gone up. The effective tariff rate in America, depending how you calculate it today, is still close to 15 per cent or so, compared to 2.5 per cent they reduced. That's a massive swing."

He added that, by conventional measures, such a steep rise in tariffs should have led the US into recession.

"Most people would have told you with such an increase in the tariff rate, America would have a recession. And that would have happened. And the tariff part of the economy is getting badly affected, but there's a bigger force than Trump," he told NDTV. 

That force, Sharma said, is the rapid and unprecedented expansion of AI investment, a phenomenon that has turned the US economy into "one big bet on AI."

"Today, the American economy has become one big bet on AI," Sharma said. "The hyperscalers, the big tech companies in America today, they're spending close to $500 billion over the next year, just on building the AI infrastructure. That's a massive impulse which is going on out there."

Sharma described the current AI boom as both transformative and risky.

"There is no doubt that I'm a big believer that AI will have a transformative effect," he said. "But as happens with every technology in history, from railroads to the internet, the good idea then gets far too much - there's too much money that comes chasing the good idea. And then finally, there's overinvestment. And that leads to declining returns over time."

According to findings in the 2025 AI Index Report by Stanford University, corporate AI investment reached $252.3 billion in 2024, up nearly 45 per cent from the previous year. Private investment in generative AI alone jumped to $33.9 billion, more than eight times the level of 2022.