The U.S.-China trade war has been dragging on for years now, but just when things seemed to be cooling down, 2025 brought a fresh round of fire. And it’s not just the U.S. and China that are feeling the burn, countries like India are now finding themselves uncomfortably close to the flames.
Let’s break down what’s happening, why China is clapping back harder than ever, and how India is getting caught in the ripple effects.
Round Two: China Hits Back Hard
If you thought the tariff drama was over, think again. In response to new U.S. tariff hikes on Chinese goods, Beijing didn’t just sit back it struck back, and strategically.
China announced new tariffs ranging from 10% to 15% on key U.S. exports like crude oil, coal, LNG, and agricultural machinery, starting February 2025. These aren’t random choices. They’re meant to hurt where it matters industries that support American jobs and politics.
But China didn’t stop there.
- Export Controls: China tightened its grip on critical minerals like tungsten and tellurium, both essential for electronics, green tech, and defense manufacturing. This move directly threatens U.S. ambitions in high-tech sectors.
- Company Blacklisting: Major U.S. companies like Illumina (a biotech firm) and PVH Group (the folks behind Calvin Klein and Tommy Hilfiger) were added to China’s “unreliable entities list”, essentially curbing their business in the Chinese market.
- Taking It to the WTO: In a bold diplomatic move, China also filed a complaint with the World Trade Organization (WTO), accusing the U.S. of violating global trade rules.
All of this sends a clear message: China’s not backing down — in fact, it’s ready to “fight to the end.”
Why India Should Care
India might not be a direct player in the U.S.-China showdown, but it’s certainly feeling the pressure.
First, there’s the supply chain crunch. With China restricting exports of rare minerals, Indian manufacturers — especially in electronics and renewable energy are facing higher input costs.
Second, there’s the reciprocal tariff fallout. India has had its own issues with the U.S., especially after it was removed from the Generalized System of Preferences (GSP), which had allowed duty-free exports of many Indian goods to the U.S. That hurt sectors like textiles, jewelry, and agriculture.
And now, with China tightening trade terms on Indian pharmaceuticals and tech products (a not-so-subtle response to India’s ban on Chinese apps and tech post-Galwan clash), things are getting more complex.
Walking the Trade Tightrope
India’s caught in a tough spot: it wants to be seen as a reliable U.S. ally while still maintaining a working relationship with China, its biggest trading partner. The challenge is real.
But there’s opportunity too.
With Western countries looking to “de-risk” from China, India is being eyed as an alternative manufacturing base. The government’s Make in India and PLI (Production Linked Incentive) schemes are aimed at cashing in on this moment.
Still, to truly benefit, India needs to up its game: improve infrastructure, simplify regulations, and ink trade agreements that can bring stability amidst global volatility.
What’s Next?
If this trade war has taught us anything, it’s that economic nationalism is back — and it’s not going away anytime soon. The U.S. and China are both digging in, using tariffs, tech restrictions, and trade alliances as weapons in a new kind of cold war.
For India, the goal now is to stay agile. It needs to protect its interests, diversify its trade, and prepare for a future where global economic power is no longer defined by just two players but by how well others navigate between them.
Have thoughts on how India should respond to global trade shifts? Drop them in the comments — let’s discuss!
Sources:
- https://www.business-standard.com/world-news/china-hits-back-at-trump-s-tariffs-imposes-duties-initiates-action-in-wto-125030400747_1.html
- https://abc17news.com/money/cnn-business-consumer/2025/02/03/china-imposes-tariffs-on-us-imports-including-crude-oil-agricultural-machinery
- https://www.businessinsider.com/us-china-trade-war-retaliatory-trump-tariffs-expensive-inflation-prices-2025-4
More Current Affairs: https://learnproacademy.in/updates/