US-China tariff deal may undercut India's trade advantage
However, on Monday, China and the US reached a deal under which the US will cut tariffs on Chinese imports from 145% to 30%, while China will reduce duties on US products from 125% to 10%. These reductions will not impact any sector-specific tariffs or exemptions that existed prior to April 2, 2025.
Currently, Indian goods face a 10% baseline duty in the US, after Washington decided to pause the 26% reciprocal tariff for 90 days.
The narrowing of this tariff gap could intensify competition for Indian exporters. 'It could entail stark competition for Indian exporters considering the narrowing of the tariff gaps between Chinese and Indian exports,' says Krishan Arora, Partner and Leader, India Investment Advisory Services at Grant Thornton Bharat LLP. He adds that India Inc must now revisit its production and logistics costs and develop more efficient value chains to remain competitive in export markets.
Since the US ramped up tariffs on Chinese imports to 145%, India had hoped to benefit from the high tariff differential. iPhone maker Apple had even announced that the majority of iPhones sold in the US during the April–June 2025 quarter would be manufactured in India, fueling hopes that a broader shift of manufacturing from China to India was underway.
However, with the new US-China trade deal, that shift now seems uncertain.
'While low-investment assembly operations may linger in India for now, deeper manufacturing—the kind that builds real industrial ecosystems—may stall or even return to China,' says Ajay Srivastava, Founder, Global Trade Research Initiative (GTRI).
Meanwhile, Deepanshu Mohan, Professor of Economics at OP Jindal Global University, says an immediate reorientation of supply chains was unlikely, even under the earlier high-tariff regime. He adds that export-competitive manufacturing in India remains limited, and expecting significant gains from reciprocal tariffs was not realistic.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India.com
28 minutes ago
- India.com
Bad news for Ratan Tata's TCS after massive layoffs, IT giant loses Rs 5.66 lakh crore due to..., worst phase for company since...
TCS is undergoing its worst crisis since the 2008 recession. (File) TCS market cap: Amidst the backdrop of the controversy surrounding its decision to cut more than 12,000 jobs in the current fiscal year, Tata Consultancy Services (TCS), India's largest IT services exporter, has witnessed a rout of its market cap, which slumped from Rs 16.57 lakh crore to Rs 10.93 lakh crore, a decrease of Rs 5.66 lakh crore. According to market analysts, TCS, the flagship company of the Tata Group, is going through it worst crisis since the 2008 recession, when it shares had fallen by 55 percent. TCS share prices have dipped 25 percent in 2025, and experts predict the current financial could be the worst in company's history if the downfall continues. Why TCS shares are falling? According to analysts, India's stock market has witnessed a turmoil over the past few months as foreign investors are withdrawing from the market in droves amid US President Donald Trump unleashing tariff war against India, and recently announcing 50% import duty on Indian exports. The IT industry, once considered a favorite for FIIs, is now witnessing a decline, with foreign investors reducing their stake in TCS from 12.35% in June 2024 to 11.48% in June 2025, which has resulted in the company's shares falling by over 25 percent in the current financial year. The Nifty IT index has fallen 25% so far this year, making it the worst-performing sector in the market as over half of the Rs 95,600 crore withdrawn from India by FIIs till July 2025 has come from IT stocks alone. Why mutual funds investment increased? Meanwhile, domestic mutual funds have raised their stake in TCS from 4.25% to 5.13%, making fresh purchases worth Rs 400 crore in the company, according to data. TCS' trailing PE declined from 41x to 20x, five-year CAGR stands at 8.5%, while stock CAGR is 6%, the data showed. Notably, India's IT sector has grown at a compounded annual rate of 12.5% over the last two decades, but has underperformed the Nifty over the last three to five years. TCS layoffs According to recent media reports, TCS is mulling to cut about 2 percent of its global workforce, which would result in over 12,000 TCS workers losing their jobs in the current financial year. The company's decision is being investigated, with Jefferies warning that TCS layoffs could result in a slowdown in execution in the near term and an increase in the workforce in the long term.
Hans India
an hour ago
- Hans India
Ageing population, high debt seen as drags on China's growth ahead
China is expected to face an adverse economic impact in the coming decades due to its ageing population and high government debt, according to reports. High government debt raises interest costs and leaves less fiscal room to respond to shocks, just as ageing populations push up pension and health outlays, according to a report in Newsweek. The Chinese and US governments are among the most indebted in the world. The US government's gross debt at 123 per cent is equal to the country's GDP, according to International Monetary Fund data. China's stands at 84 per cent, buoyed by debt-driven growth in the 2010s and a housing market crunch that has heavily indebted local governments. London-based global advisory firm Oxford Economics estimates the Chinese economy's potential growth could be cut roughly in half by the 2050s. According to the Newsweek report: "Soaring pension and healthcare expenses are the biggest policy challenge of the 2020s in all advanced economies and most emerging ones." As per a United Nations report, China currently has a median age of around 40, which is well above the global average, and is projected to reach 52 by 2050. This would be much higher than even the US median age, which is expected to stay around 41 years. China's old-age dependency ratio, or the share of people aged 65 and older, is projected to rise by more than 50 percentage points by 2026 compared to 2010, versus roughly 8-10 points in the United States. This will strain China's modest safety net. And unless the country is able to reverse its flagging birth rate, this will shift the burden onto a smaller pool of workers, according to the report in Newsweek. Jed Cartledge, an economist and one of the authors of the Oxford Economics report, said this better positions the US demographically. China's fertility rate of 1.2 births expected per woman is among the world's lowest. While higher, the US rate of 1.6 births remains well below the rate of 2.1 necessary to sustain a population naturally. Cartledge pointed out, however, that historically, immigration has largely offset declining births and averted demographic problems in the U.S. "Admittedly, US immigration is taking a hit under the second Trump presidency, but we're expecting the reduction in net immigration to only last through the remainder of his second term before reverting to a 1.1 million per annum, which was the typical pace prior to the pandemic," Cartledge told Newsweek.
Time of India
an hour ago
- Time of India
INDIA bloc leaders likely to discuss joint Vice-Presidential candidate on Monday
The opposition INDIA bloc leaders are likely to discuss their joint candidate for the post of vice-president at a meeting of floor leaders on Monday morning. Independence Day 2025 Modi signals new push for tech independence with local chips Before Trump, British used tariffs to kill Indian textile Bank of Azad Hind: When Netaji Subhas Chandra Bose gave India its own currency Sources said the INDIA bloc leaders would meet at the office of Mallikarjun Kharge, the leader of opposition in Rajya Sabha, at 10.15 am on Monday. The meeting will be held a day after the ruling National Democratic Alliance (NDA) announced Maharashtra Governor C P Radhakrishnan as its nominee for the post of vice-president, the second-highest constitution position in the country. Radhakrishnan hails from Tamil Nadu, which will go to polls in 2026. While the ruling BJP feels that the nomination of Radhakrishnan, a seasoned BJP leader with an RSS background, will elicit support from the wider opposition, especially the ruling DMK in Tamil Nadu, it remains to be seen what stand the opposition parties take on Monday. Live Events BJP president J P Nadda, while announcing the nomination of Radhakrishnan after a meeting of the party's parliamentary board on Sunday, said the NDA will speak to the opposition parties to reach a consensus for the vice-presidential election. The Congress-led INDIA bloc partners earlier announced their decision to field a joint 'non-political' candidate for the election. The vice-presidential election, necessitated by the sudden resignation of incumbent Jagdeep Dhankhar last month, is scheduled for September 9. The last date for filing nomination is August 21.
