Tariff Cuts Between US and China Raise Concerns for India

New Delhi, May 13 (KNN) A new trade agreement between the United States and China to significantly reduce tariffs has cast uncertainty over India’s recent export and manufacturing gains.

The US will now lower tariffs on Chinese imports from 145 per cent to 30 per cent, while China will cut duties on American goods from 125 per cent to 10 per cent.

This sharp revision narrows the tariff gap that had briefly favoured India. Previously, Indian exports to the US faced a lower additional tariff of 26 per cent, compared to China’s 145 per cent, encouraging manufacturers—like Apple—to shift production to India.

Currently, Indian goods face only a 10 per cent baseline duty, after Washington paused the 26 per cent reciprocal tariff for 90 days.

Experts warn that the revised US-China deal could intensify competition for Indian exporters. “It could entail stark competition… considering the narrowing of the tariff gaps,” said Krishan Arora of Grant Thornton Bharat LLP. He urged Indian firms to improve efficiency in production and logistics.

Ajay Srivastava of Global Trade Research Initiative noted that deeper manufacturing investment may now stall or even revert to China. “Low-investment assembly operations may linger in India… but real industrial ecosystems may not evolve further.”

Meanwhile, Deepanshu Mohan of OP Jindal Global University cautioned against overestimating earlier benefits. “Export-competitive manufacturing in India remains limited,” he said, noting that the previous high-tariff regime was unlikely to drive major supply chain shifts alone.

With the tariff advantage shrinking, India may need to focus more on internal reforms, value chain improvements, and infrastructure upgrades to stay competitive in global trade.

(KNN Bureau)