US-China Trade Deal: What It Means for India

Soon after being elected for the second time, US President Donald Trump started taking aggressive steps in global trade policy. His import tariff hike policy has caused upheaval in the international market. However, in the recent trade talks held in Geneva, the US and China have decided to reduce tariffs on each other's imports. Discussions are currently underway on how this agreement will affect India. According to a joint statement released by the two countries in Geneva, the US will reduce tariffs on products coming from China from 145 percent to 30 percent. This decision has temporarily stopped the 'trade war' between the US and China. However, the improved relations between these two superpowers may prove challenging for India.

India and the US are in talks on a Bilateral Trade Agreement (BTA). However, progress in these talks is slow and India has started considering increasing import duties on US steel and aluminium. India has submitted an official document to the World Trade Organisation (WTO) in this regard. While the India-US agreement is not yet finalised, the US is finalising trade agreements with the UK and China. Therefore, this policy could be problematic from India's perspective. Especially at a time when companies from all over the world were considering investing in India instead of China due to the 'China Plus One' policy, the US-China agreement is likely to limit these opportunities.

As Ajay Srivastava of the Global Trade Research Initiative points out, the 90-day tariff reduction has improved trade between the two countries, but it will limit India's gains. Given the current developments, India-US relations are showing signs of tension. India initially had positive expectations due to Trump's stance, but recent events have made the relationship more complicated.