Mixed Reactions to U.S.-China Trade Pact:
- Opportunities for India:
- Some experts see the agreement as beneficial for India, opening up export opportunities in sectors like pharmaceutical APIs, gems and jewellery, engineering goods, organic chemicals, and IT-enabled services.
- These sectors remain less affected by the U.S.-China trade dynamics, allowing India to strengthen its export position.
- Challenges for India:
- Investment Shift Back to China: The reduction in tariffs could lead to a reversal of the investments that previously flowed into countries like India, Vietnam, and Mexico due to high U.S. tariffs on China.
- Shift in Production: As tariffs decrease, companies that relocated their production outside China might consider returning, which could affect India’s manufacturing and investment inflows.
Impact on U.S.-China Bilateral Trade:
- Increased Trade Between U.S. and China: The tariff reduction is expected to lead to a surge in high-value trade between the two countries, particularly in sectors like electronics, machinery, and chemicals.
- This could intensify competition for India in these sectors, especially in terms of price and market share.
Unresolved Issues in the Trade Deal:
- The deal does not address the high trade imbalance between the U.S. and China, which was a central concern for the U.S. under the previous administration.
- Without addressing these underlying issues, the deal may have limited long-term impact on global trade dynamics.
Potential for Reduced Dumping:
- Lower tariffs between the U.S. and China might lead to less dumping of Chinese goods in third-party markets, including India and Vietnam, providing some relief to these countries. However, this could also mean that India faces less competition from cheaper Chinese goods in its domestic market.
