New Delhi: America and China — two superpowers about whom there were reports of a trade war for months — are now at loggerheads. An eight-point agreement has been reached between the two countries, which includes a mutual tariff reduction arrangement of $30 billion and a deal to start talks on Artificial Intelligence (AI). This agreement of us china tariff cut deal took place during the visit of Chinese President Xi Jinping to America, and it has a deep meaning for India.
According to Xinhua report, this agreement was reached at the end of the three-day summit between Xi Jinping and US President Donald Trump. The relief provided by the US includes agricultural products, seafood and medical equipment, while China has reduced tariffs on products such as toys and small household appliances. The question is what effect this rapprochement between the world's two largest economies will have on India's exports and diplomacy.
us china tariff cut deal: increased challenge for India's exports
The most direct impact is expected to be on Indian exports. If China gets tariff exemption in the American market, then Chinese goods will become cheaper there. In such a situation, it may be difficult for Indian goods to compete in the American market. The affected categories include engineering goods, electronics and other products — the same sectors in which India is trying to expand its presence.
Till now, India has been benefiting strategically and diplomatically from the US-China tension. As relations between the two superpowers improve, India is also expected to be at increased risk of accepting conditions or facing pressure on its trade and defense agreements with the US.
Busan Agreement also got extension
Earlier, US Finance Minister Scott Besant had said that Washington and Beijing have extended their existing trade agreement by two months till January 10, 2027 — called the 'Busan Agreement'. This will delay an immediate escalation of tensions over tariffs related to industrial over-production and will give both sides more time to resolve outstanding issues.
Under the agreement, the US agreed to reduce tariffs on Chinese goods, while China agreed to resume purchasing American soybeans, stop new restrictions on rare-earth exports and take steps against the trade of chemicals used to make fentanyl.
Greer claims: Agreement has been reached on many things
US Trade Representative Jameson Greer said on CNBC's 'Squawk Box' program, 'We have actually made agreements with China on many of these things.' He mentioned American agricultural products and medical equipment along with Chinese consumer goods that are considered 'non-sensitive'.
In fact, there was a period of tariff increase and retaliatory action between the two countries for months. Now the summit took place with an emphasis on personal diplomacy, and while no major breakthroughs were publicly claimed, there were concrete outcomes such as tariff relief and AI discussions.
What should India do?
This deal has brought a double challenge for India. On one hand, China's cheap goods will increase export competition in the American market, on the other hand, India's bargaining power on the diplomatic platform may also be affected. Experts believe that India will have to accelerate its FTA negotiations and attract investments more aggressively in line with the 'China-plus-one' strategy. This dalliance of friendship between America and China is a sign of strategic alertness for India.