China looks to India for trade ahead of US tariff announcement

The United States’ new tariffs, set to go live on Wednesday, are pushing China towards a more Indian-inclined market, in which officials are reportedly seeking to deepen bilateral trade relations. Beijing’s Ambassador to India, Xu Feihong, said that China is keen to import more Indian products suited to the Chinese market in an effort to balance the trade relationship. 

The announcement comes as the US government prepares to implement reciprocal tariffs on countries around the world, specifically targeting China and India for what Trump considers “unfair trade practices.” 

According to a report published by China’s state-run Global Times on March 31, Xu told the press that the Chinese government is “willing to work with the Indian side to strengthen practical cooperation in trade.” 

The US factor: Trump’s trade push

China is at odds with several of US President Donald Trump’s trade policies and is reportedly seeking to broaden its trading relationships while reducing its reliance on the United States. Consequently, India has expanded its trading relationships with the East Asian jurisdiction.

In 2023-24, bilateral trade between India and China amounted to $101.7 billion, with India’s exports to China reaching $16.6 billion. India’s significant numbers in exports include petroleum oil, iron ore, marine products, and vegetable oil, which could also see an uptick if the US-Chinese push-and-shove relationship continues.

US President Trump has made it clear that he intends to eliminate trade imbalances and unfair practices, especially in sectors like technology and agriculture. His administration has pointed fingers at both China and India for what it views as protectionist policies that negatively impact US exports. 

According to a Tuesday Reuters report, the Office of the US Trade Representative (USTR) called out India for its customs barriers, high tariffs, and complex import regulations, which it claims hinder US trade. Yet India has tried engaging with the US to address these concerns, starting from the meeting Prime Minister Narendra Modi had with Trump at the White House in January.  

In March, PM Modi talked about his admiration for Trump during a podcast, saying that his government was willing to negotiate on trade issues. As Cryptopolitan reported on March 25, India is open to cutting tariffs on US imports to ease tensions between the two countries. 

China and India relations

In the past few years, China and India’s relationship has been tense. Things got even worse after violent battles in the disputed Himalayan region in 2020. The fights were the first deadly clashes between the two nuclear-armed countries in forty years. As a result, India blocked Chinese investment and made it harder for Chinese companies to get into its technology market.

Indian and Chinese leaders have made efforts to ease hostilities, with Prime Minister Modi and Chinese President Xi Jinping agreeing to restart direct flights at the BRICS summit last year.

Still, the relationship is fraught with tensions, exacerbated by Modi’s government’s overtures to Trump in hopes of securing better trade terms while also negotiating with China, a US competitor, to restore their bilateral ties. 

On Sunday, Trump suggested he might reduce tariffs on Chinese imports in exchange for an investment deal on the Chinese social media platform TikTok. The US president had initially banned the app’s usage within the nation but signed an executive order to postpone the ban to April 5. If no terms are agreed upon by then, US citizens will be locked out of TikTok yet again.

China prepared to battle the US, stocks plummet

April 2 tariffs are just a blink away, and Asian shares, particularly in Japan and South Korea, are showing signs of investors’ jittery state. Many fear that the imposition of high tariffs could lead to a more pronounced slowdown in global economic growth.

According to Scott Kennedy, a senior adviser at the Center for Strategic and International Studies, the ongoing trade tensions could have significant consequences. 

Speaking at a global business forum in Beijing, Kennedy explained, “We might see these negotiations and pressure result in a pulling back of these threats, and a resumption of a more stable relationship, but things could get a lot worse. We could see tariffs go sky-high and investment fall. That would lead to some sort of at least incremental decoupling between the two economies, and there’d be a lot of suffering.”

In early March, a spokesperson for China’s Foreign Ministry propounded that the US should return to dialogue and cooperation, and warned that if the US desires a “trade war,” China will not back down.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More