Amid seemingly worsening trade ties between the US and China, which has raised hopes of more US-bound orders shifting to India, China’s Ministry of Commerce said Friday that it is “evaluating” the possibility of initiating tariff negotiations with the US.
“China has noticed that the senior leadership of the United States has repeatedly stated that it is willing to negotiate with China on tariff issues. At the same time, the United States has recently taken the initiative to convey information to China through relevant parties, hoping to talk to China. In this regard, China is evaluating it,” the Ministry said in a statement.
This comes as Indian exporters have started receiving more orders and inquiries from US clients, amid elevated tariffs on Chinese goods. Exporters told The Indian Express that the availability of shipping containers — which had been a constraint — is beginning to improve due to the cancellation of several Chinese shipments to the US. However, any return to normalcy between the US and China could slow the shift in business towards India.
Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), told this paper that several Chinese exporters have reached out to Indian suppliers for help in fulfilling US orders, as they do not wish to lose their US clients. A deal that results in lower Chinese tariffs may potentially weaken the role of Indian suppliers.
The biggest shift so far has been observed in the electronics sector. Apple CEO Tim Cook said that a majority of iPhones sold in the US during the June quarter will be exported from India. However, he added that he could not offer a longer-term outlook due to the evolving trade war between the US and China, where Apple currently manufactures most of its products.
Notably, US President Donald Trump had signed a two-phased deal with China during his first term, which included broader market access for US agricultural goods. Trump had also been negotiating with several countries — including India — after threatening to raise tariffs.
China seeks cancellation of tariffs to begin talks
In its statement, China said that the tariff and trade wars were unilaterally initiated by the United States. If the US genuinely wants talks, it should show sincerity by cancelling its unilateral tariff hikes.
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“We have noticed that the United States has been constantly talking about adjusting tariff measures recently. What China wants to emphasise is that in any possible dialogue, if the United States does not correct the wrong unilateral tariff measures, it shows no sincerity at all and will further erode mutual trust. It does not work in China to say one thing, do another, and try to use coercion and blackmail under the guise of negotiations,” the translated statement said.
The possibility of an eventual US-China deal also gathers as US Treasury Secretary Scott Bessent said last month that the current tariff standoff with China is unsustainable and that he expects a “de-escalation” in the trade war between the world’s two largest economies, according to the Associated Press. In a private speech, Bessent cautioned that formal talks between the US and China had yet to begin.
China far ahead in productivity
A potential US–China trade deal could quickly help Chinese exporters regain ground, due to the superior technical expertise China has built over the years. Indian manufacturers say India is currently not in a position to meet US demand in several labour-intensive sectors such as non-leather footwear.
Mecca Rafeeque Ahmed, past president of the Federation of Indian Export Organisations (FIEO), said the Indian footwear industry is largely focused on leather, while US demand lies in non-leather segments where China leads its competitors. “A number of inquiries are coming in from the US, and India is shifting towards the non-leather segment. But a portion of the business may well move to Bangladesh, as the movement of Chinese professionals is not a problem there. Chinese technicians and machinery have helped boost productivity there,” Ahmed said.
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Notably, Vietnam has also become a major hub for footwear manufacturing due to its deepening ties with China. After the first trade war with China, Vietnam swiftly became the top supplier for Nike. The country has also gained from Chinese expertise in the textile sector, becoming a key player in the apparel manufacturing supply chain.
Tariffs on China a net positive for Indian industry
A US–China trade deal may not be in India’s interest, as emerging market economies like India stand to gain from the disruption caused by the trade conflict.
Richard Baldwin, Professor of International Economics at IMD Business School, told this paper that if high tariffs on China remain, it would be advantageous for large emerging markets. “China was a big competitor before, and it has now been hobbled,” he said. However, he pointed out that the now-deferred reciprocal tariffs did not cover pharmaceuticals and electronics — two sectors where India could have benefited most.
“From a geo-economic perspective, anything that’s bad for China is good for India,” Baldwin added.
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US–China tensions unlikely to ease soon
Baldwin also said that a thaw in US–China relations is unlikely in the near term, due to a bipartisan consensus in the US that sees China as a national security threat.
“Within the US, there are two major factions. The first is the national security establishment, which sees China as a strategic threat. That sentiment dominates both the White House and Congress and isn’t going away. The second is the economic camp, which believes China’s trade practices are hurting the US. That view now enjoys broad support. Biden hasn’t rolled back Trump’s tariffs, and even if someone like Kamala Harris had been elected, we wouldn’t have seen them lifted — perhaps just slowed,” he said.
Baldwin reiterated that the US is not moving closer to China, adding that China is now retaliating more forcefully than before. “During Trump’s first term, China was relatively restrained. But now they’re hitting back, which could lead to factory slowdowns and job losses in the US,” he added.