US-China Trade Tensions: Recently, the slowdown in the ongoing tariff war between America and China has definitely given some relief to the global economy, but its impact is being seen negatively on India’s electronics sector. The reduction in trade tensions between the two countries after the meeting of the US and Chinese Presidents in Busan was described as a ‘success’, but this development has raised concerns for India’s electronics industry.

Impact of US-China agreement

After the reduction in the tariff (import duty) imposed by America on goods imported from China, Indian electronics companies have expressed the fear of lagging behind in competition. The industry says that this may weaken their hold in the American market, because now Chinese products will reach there at a cheaper rate. For this reason, Indian industry has appealed to the government to take supportive policy steps to reduce this potential impact.

After the meeting between US President Vladimir Putin and Chinese President Xi Jinping on October 30, the US reduced the fentanyl tariff imposed on China from 20 percent to 10 percent. According to the report of Economic Times, due to this step the competitive advantage that India was getting till now has reduced significantly.

ICEA’s concern

India Cellular and Electronics Association (ICEA) said in a letter to the government on November 6 that the cut in US tariffs on Chinese goods could lead to a decline of about 10 percent in the profits of Indian electronics companies. ICEA represents the country’s major electronics companies — Apple, Google, Motorola, Foxconn, Vivo, Oppo, Lava, Dixon, Flex and Tata Electronics.

This situation is also important because the electronics sector has been prominent among the sectors of India which have made the fastest progress under the ‘Make in India’ initiative. This new challenge arising from the trade agreement between America and China could threaten to slow down India’s success.

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US President Donald Trump indicated on Sunday (October 19, 2025) that his government may reconsider the tariff policy if China takes some positive steps in favor of America. This statement has come at a time when just a few days ago the Trump administration had announced to increase the duty on goods imported from China by 100 percent and implement software export control from November 1.

Trump told the media that relations between him and Chinese President Xi Jinping are better than normal. He said that differences exist between the two countries, but if Beijing does something good for America then reduction in tariffs is possible. According to Trump, this is no longer a one-way street. We will protect our interests but there is scope for agreement if China cooperates.

Tension rising again in trade war

After the peace of the last few months, the US-China trade war seems to be intensifying once again. Washington has recently tightened export controls on technology products and is preparing to impose additional duties on Chinese ships in US ports. In response, China has imposed strict rules on the export of rare earth minerals and other strategic materials.

Preparation for new negotiations and possible agreement

US Treasury Secretary Scott Besant has confirmed that representatives of the two countries will hold new trade talks in Malaysia this week. This meeting is being seen as an attempt to improve relations after Trump’s recent statements and the canceled meeting with Xi Jinping. Beijing has also indicated that it is ready for a new round of talks amid the tariff dispute.

WTO’s warning – threat to the global economy

World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala has warned that the ongoing trade conflict between America and China could cause huge damage to the global economy. He said that if this tension continues, there could be a decline of about 7% in world production. According to him, the US-China trade tension is not only bilateral but will affect the entire world economy.

What is Trump’s strategy?

Experts believe that this policy of Trump is part of his “Deal Diplomacy”. They first take tough steps, then open the way for talks so that political and technical concessions can be achieved. The Trump administration’s tariff policy has also affected the US technology sector, especially the semiconductor and software industries, which consider China a major market.

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Indian exporters can take advantage of the increasing trade tension between America and China. America has imposed new and higher tariffs i.e. import duties on many goods coming from China, due to which Chinese products will become expensive in the American market. Because of this, the demand of American companies and buyers may now move towards India instead of China.

Federation of Indian Export Organizations (FIEO) President SC Ralhan said that this is a good opportunity for Indian exporters. He said that India already exports many types of goods to America and now exports can be increased by taking advantage of this situation. Along with this, it will give Indian companies an opportunity to compete more in the American market and create new buyers.

Due to imposition of tariff on Chinese goods by America, demand may increase towards India. In 2024–25, India exported goods worth $86 billion to America. Regarding this, Ralhan, President of Federation of Indian Export Organizations (FIEO), said, “We can benefit from this increasing tension.”

America imposed 100% tariff on China

On Friday (October 10), America had announced the imposition of additional 100% tariff on goods coming from China from November 1. With this the total duty on Chinese imports will reach approximately 130%. This step was taken after Beijing imposed strict controls on the export of rare earths on October 9. Rare earths are essential for America’s defense, electric vehicle and clean energy industries.

Currently the US imposes 50% duty on Indian goods, which includes an additional 25% tariff. SC Ralhan said, “Now we will benefit from 100% additional tariff on Chinese goods. This will open up huge opportunities for India in the American market.”

Another expert said that due to this tariff, Chinese goods will become expensive in the American market and their competition will reduce. Toy exporter Manu Gupta also believes the change will help Indian businesses attract new buyers. He said, “It will be beneficial for us. Higher tariff will provide a level playing field.” He also told that American retail giant Target has approached him for new products.

Think tank GTRI said that the growing trade dispute between the US and China could increase global prices of electric vehicles, wind turbines and semiconductor parts. In addition, the US is heavily dependent on China for electronics, textiles, footwear, white goods and solar panels.

America is India’s largest trading partner for the fourth consecutive year

America remains India’s largest trading partner for the fourth consecutive year in 2024–25. Bilateral trade reached $131.84 billion, which included exports of $86.5 billion. The US accounts for about 18% of India’s total merchandise exports, 6.22% of its imports and 10.73% of its total trade. Currently India and America are negotiating a bilateral trade agreement.

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