In one of the most important global trade meetings of the year, US President Donald Trump and Chinese President Xi Jinping met in South Korea on Thursday. The meeting ended in a temporary truce between the world’s two largest economies. US-China Trade, while this agreement helped reduce immediate trade tensions, experts believe it is fragile and short-term, as both sides agreed that the deal will be reviewed every year, unlike standard WTO-compliant trade deals that last longer and offer more stability.
US-China Trade: What the US and China Agreed On
Under the new understanding, the US lowered tariffs on Chinese goods from 57% to 47%, backing off from its earlier threat of a 100% tariff hike starting November 1. In return, China agreed to restart purchases of US agricultural products such as soybeans and paused for one year its restrictions on rare earth minerals, which are vital for making electronic devices and green energy products.
However, the trust deficit remains deep. The two countries did not reach any conclusion on key issues like Section 301 and Section 232 tariffs, or the extra port fees both sides had imposed on ships from each other’s countries. The US had also recently launched a Section 301 investigation to check whether China had followed the promises made in earlier trade talks during Trump’s first term.
What It Means for India
While the US and China have slightly eased tensions, India now faces the world’s highest average US tariffs — around 50%. This could make Indian exports less competitive in the American market. Experts believe India should aim to negotiate a trade deal with the US that brings tariffs down to 15%, similar to what the UK and Japan have received.
If India can get a 15% tariff rate, it would have a clear edge over China (47%) and ASEAN countries (19–20%), including Vietnam, Malaysia, and Cambodia. A lower tariff would make Indian goods more attractive to US buyers, helping India become a stronger player in the global supply chain under the “China plus one” strategy, where global companies diversify beyond China.
Trade expert Arpita Mukherjee from ICRIER said, “If India can sign a deal with the US securing 15% and protecting sensitive areas through quotas, we have nothing to lose. The US is not a manufacturing hub, and even cutting duties on items like Harley-Davidson bikes to 0% won’t hurt India.”
She added that while such a deal may not remove all uncertainty, India should follow the examples of the UK, EU, and Japan, which have managed to sign flexible but beneficial trade agreements with the US. Mukherjee also highlighted that India could gain more when discussions expand to services, IT, and digital trade, and when H1B visa policies are part of the negotiation.
US-China Trade: China Still Has the Upper Hand
Despite the US tariffs, China’s exports to the US remain strong. According to data from the Global Trade Research Initiative (GTRI), China’s exports to the US rose from $28.8 billion in May 2025 to $34.3 billion in September 2025. In contrast, India’s exports dropped 37% — from $8.8 billion to $5.5 billion — during the same period.
GTRI co-founder Ajay Srivastava explained that the US remains heavily dependent on China for semiconductors, rare-earth materials, pharmaceuticals, and consumer goods, giving Beijing powerful leverage. Even though Washington wants to reduce this dependence, China’s strong industrial base still allows it to maintain its export performance.
Economist Trinh Nguyen from Natixis added that a pattern seems to be forming in Trump’s trade policy. “Super allies like the UK and Japan get 15% tariffs, mid-level allies get 19–20%, and others face higher rates. India must push for the 15% rate if it wants to compete globally,” she said.
ASEAN Gains, China Watches Closely
The US has also signed new trade agreements with Malaysia and Cambodia during the ASEAN summit, which are seen as attempts to reduce Chinese influence in Southeast Asia. According to Professor Simon J. Evenett from IMD, these deals include security clauses that require ASEAN partners to align with US measures against “third parties” — a clear reference to China.
Evenett explained that this alignment could lead these countries to raise port charges or impose trade restrictions on Chinese ships, similar to what the US has already done. These measures are likely to concern Beijing, as China has invested heavily in ASEAN economies.
What Lies Ahead
The US-China Trade has brought temporary calm to global markets, but the yearly review clause shows that tensions could return anytime. For India, this is both a challenge and an opportunity. The challenge is that India now faces higher tariffs than most countries, making its exports less attractive. The opportunity lies in securing a new trade deal that cuts tariffs and positions India as a key manufacturing hub under the “China plus one” strategy.
If India can strike a 15% tariff deal with the US while protecting sensitive sectors, it could strengthen its exports, attract new investments, and boost job creation — all while reducing its trade dependence on China.
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