AI: The "Bigger Force Than Trump" Reshaping the Global Economy, Says Ruchir Sharma

Ruchir Sharma's comments emerge as Trump continues to defend his tariff approach.

Purnea, Bihar:

While US President Donald Trump's tariff disputes have disrupted global markets, artificial intelligence (AI) represents a "bigger force than Trump" that is reshaping both the American and global economies, according to global investor, author and founder Ruchir Sharma.

In a conversation with NDTV's Editor-In-Chief Rahul Kanwal, Sharma explained that AI's impact on the US economy has effectively "out-Trumped Trump."

Sharma's observations come as Trump reaffirms his tariff strategy. Trump imposed 25 percent reciprocal tariffs on India, with an additional 25 percent linked to Delhi's Russian oil purchases, which India has 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 percent or so, compared to 2.5 percent they reduced. That's a massive swing."

He noted that by traditional economic measures, such a significant increase in tariffs should have pushed 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, according to Sharma, is the rapid and unprecedented growth in AI investment, a phenomenon that has transformed 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 characterized the current AI boom as both transformative and filled with risk.

"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 percent from the previous year. Private investment in generative AI alone jumped to $33.9 billion, more than eight times the level of 2022.