US-China trade truce raises mixed concerns for India, say experts

The recently announced temporary trade agreement between the United States and China has triggered a wave of mixed reactions among Indian trade experts, with opinions divided on the implications for India’s export competitiveness and investment inflows. The U.S. and China on Monday issued a joint statement agreeing to ease the high tariffs imposed during their months-long trade tensions. Starting May 14, the U.S. will reduce tariffs on Chinese imports to 30% from a previous high of 145%, while China will lower duties on U.S. goods to 10% from 125%. These relaxed tariffs are expected to remain in effect for 90 days as both countries continue discussions in an effort to reach a more lasting agreement.
Trade analysts in India believe the improvement in relations between the world’s two largest economies could bring both opportunities and challenges. “The reduction in tariffs will likely result in a surge of U.S.-China bilateral trade in high-value segments such as electronics, machinery, and chemicals,” S.C. Ralhan, President of the Federation of Indian Export Organisations (FIEO),reportedly stated. “However, India can make use of this shift to boost exports in sectors that are less affected by U.S.-China trade, such as pharmaceutical APIs, gems and jewellery, engineering goods, organic chemicals, and IT-enabled services.” Ralhan argued that while India might lose out in some areas due to increased U.S.-China trade, it still holds strong advantages in specific sectors that could see new opportunities.
Others, however, expressed concern that the easing of tariffs may reverse the gains India made during the height of the trade dispute, when many global companies began moving their supply chains out of China. “As the tariff difference becomes smaller, companies that had shifted production to places like Vietnam, India, or Mexico may return to China,” stated Ajay Srivastava, former Director General of Foreign Trade. “The ‘China Plus One’ strategy could slowly fade away. Ironically, this deal could undo the very diversification the tariff dispute aimed to encourage.”
Srivastava further reportedly noted that the agreement does not address deeper issues, including the large trade imbalance that originally caused the dispute. “President Trump’s main concern of unequal trade remains unresolved. This deal, at best, is a short-term understanding, not a complete solution.”
Some trade economists see a possible benefit. With reduced pressure from tariffs, there could be a decline in the excess supply of Chinese goods in third markets — an issue India and countries like Vietnam have dealt with in recent years. “India has often used anti-dumping measures to protect local industries. If Chinese companies find more demand in the U.S. again, the oversupply into markets like India may go down,” said an economist at a New Delhi-based think tank.
Despite the uncertainty, most experts agree that India must focus on long-term trade strength. This includes improving infrastructure, ensuring clear policies, and supporting sectors with export potential.