India Weighs Strategic Moves as US-China Tariff Truce Unfolds
New Delhi, May 12 — The temporary suspension of tariff hikes between the United States and China has prompted Indian exporters to assess both potential risks and emerging opportunities amid shifting global trade dynamics.In a significant move, Washington and Beijing have agreed to a 90-day pause on most recent import duties as part of ongoing efforts to resolve their trade conflict. The US, according to Trade Representative Jamieson Greer, has slashed its tariffs on Chinese goods from 145 per cent to 30 per cent, while China has reduced its duties to 10 per cent.
Impact on Indian Trade Interests
Commenting on the development, Federation of Indian Export Organisations (FIEO) President S C Ralhan noted that the easing of tensions between the world’s two largest economies bodes well for overall global trade stability. However, he cautioned that the renewed trade flow between the US and China could create stiff competition for Indian exporters, especially in sectors like electronics, chemicals, and machinery.“India has made notable advances in markets such as Southeast Asia, Africa, and Latin America by capitalising on the earlier US-China trade tensions. A revival in US-China trade may limit that window of opportunity,” Ralhan said.
Sectors with Growth Potential
Ralhan highlighted that India still has room to grow in areas relatively insulated from US-China trade, such as pharmaceutical APIs, engineering goods, organic chemicals, gems and jewellery, and IT-enabled services. He urged the Indian government to actively pursue enhanced preferential trade access with the US and promote India as a reliable alternative sourcing destination.With the tariff cuts being temporary, Ralhan said this might prompt companies to diversify their supply chains and invest in Indian manufacturing under initiatives like the Make in India and Production Linked Incentive (PLI) schemes, especially in key areas such as electronics, auto components, and textiles.
Monitoring Chinese Imports
Another exporter cautioned that Indian authorities must closely monitor potential surges in Chinese imports, as trade patterns adjust during the truce period.Trade Data Snapshot
India’s trade relationship with the US and China remains significant, but distinct. In FY 2024-25, India’s exports to the US grew 11.6 per cent year-on-year to USD 86.51 billion, while imports rose 7.44 per cent to USD 45.33 billion, resulting in a trade surplus of USD 41.18 billion.In contrast, exports to China fell sharply by 14.5 per cent to USD 14.25 billion, while imports increased 11.52 per cent to USD 113.45 billion, widening the trade deficit to USD 99.2 billion.
Historically, China was India’s top trading partner from 2013-14 to 2017-18 and again in 2020-21, but the US has since reclaimed that position.