President Donald Trump imposed 104% tariffs on Chinese goods, and the trade war between the United States and China rose sharply on Tuesday. This happened after China said it would “fight” against these tariffs. Prior to that, Trump had set 34% tariffs on China, in return, Beijing (a major economic rival and a major trading partner of the United States), fulfilling its own 34% of its U.S. products starting Thursday.
This growing tariff struggle between the world’s two largest economies has stirred up global markets. As these huge tariffs on each other’s goods are felt everywhere, including India. Now, the main question is whether India will fall into chaos or turn it into a huge opportunity to move forward. It all depends on how India plays the card.
There are obvious risks. Trade uncertainty often undermines business, and India’s major export sectors, such as textiles, jewelry, cashews and engineering products, can take a major hit. The United States is India’s second largest trading partner, and Indian exporters may feel the heat if demand for the United States slows down due to tariffs. Just recently, the Indian stock market has taken a huge blow, wasting more than $160 billion in investor wealth. This is a clear reminder of the interconnection of the global economy.
The supply chain is also fragile. Industry such as electronics, pharmaceuticals and automotive parts rely on stable global trade links. If it is blocked or delayed due to the trade war, this could cause serious setbacks to India’s manufacturing industry.
But there is another side to this story – it could be a shining moment for India. India suddenly found itself in a favorable position as the United States and the European Union imposed higher tariffs on imports from countries such as China, Vietnam and Bangladesh. This may be a rare opening. Indian exporters have the opportunity to fill the gap left by restricted Chinese goods.
Take electronic products as an example. As Chinese smartphones face obstacles in the United States, international brands are looking for alternatives, and India is already in scope. Similarly, agricultural supplies and textiles from India may see interest in markets that hope to reduce their dependence on China. An analyst told India’s Sputnik India that if India acts quickly, it can gain a larger share of global trade in several key areas.
Of course, this potential presents challenges. If the trade war causes U.S. or Chinese companies to cut outsourcing, India’s IT and software exports could suffer losses. Most importantly, there is a greater threat: China faces excess stocks and may start to dump its products (especially electronics and machinery), such as the UK, Germany and the UAE, which is also important for India’s exports. Competing with such cheap goods can be an uphill battle for Indian producers.
So, where is this leaving India? Between the critical point – risk and opportunity. Global trade tensions are serious, but they also provide India with unique opportunities to strengthen its position. To this end, India must act decisively. The focus should be on improving manufacturing capacity, solving supply chain problems and maintaining competitiveness in production costs. Cutting import duties on key raw materials could provide the local industry with the improvements it needs. Meanwhile, signing trade agreements with partners like the UK and the EU can open new valuable doors.
This is not just surviving the U.S.-China trade war, but using it as a stepping stone. India can increase exports, create more jobs and ensure a stronger role in the global economy. This tariff standoff is a wake-up call. The only question is – Will India respond with wise, bold actions or missed this moment? Time is ticking.
(Girish Linganna is a defense and aerospace analyst based in Bangalore. He is also the Director of Add Engineering Components, India, Pvt. Ltd, Add Engineering GmbH, Germany. The views expressed in this article are only the author’s views.)
