The ongoing trade war between the United States and China has triggered global economic uncertainty, affecting tariffs, financial markets, and international trade. What began as an attempt to address trade imbalances has escalated into a prolonged conflict reshaping global commerce.
US Tariffs and China’s Retaliation
President Donald Trump has imposed a 10% tariff on Chinese goods, prompting strong reactions from Beijing. Chinese officials have criticized the move, calling it a ‘Cold War mentality,’ and warned that it could disrupt global trade.
Additionally, China has accused the US of using the fentanyl crisis to further escalate tensions. Chinese authorities claim the US is unfairly blaming China for its opioid crisis and have threatened countermeasures.
China has responded to US tariffs by tightening export controls on crucial rare minerals like tungsten, which are vital for industries such as aerospace, defense, electronics, and energy.
In December 2024, Beijing had already banned the sale of dual-use goods and critical minerals to the US. Earlier that year, China restricted the export of gallium and germanium, key metals used in semiconductors, electric vehicles, and telecommunications. The government also imposed curbs on certain types of graphite, further complicating supply chains for global manufacturers.
Why Did Trump Start the Trade War
Trump first imposed tariffs on Chinese goods in 2018 to reduce the US trade deficit. He argued that China was exporting far more to the US than it imported, putting American industries at a disadvantage. His administration aimed to protect US manufacturing jobs by making Chinese imports more expensive.
Beyond the trade deficit, Trump’s advisors have accused China of unfair trade practices, including intellectual property theft, forced technology transfers, and state subsidies that give Chinese firms an unfair edge. The tariffs were intended to pressure China into changing these practices and improving protections for intellectual property.
Will India Benefit From US-China Trade War
As the US imposed tariffs on Chinese goods, many global businesses sought alternative suppliers, creating opportunities for India. Indian exports to the US, particularly in electronics, textiles, and chemicals, saw a sharp rise.
According to experts, Indian exporters received higher orders due to uncertainty over Chinese imports. The electronics sector, in particular, benefited. A report by Oxford Economics noted a significant rise in India’s share of US electronics imports from 2017 to 2023, with companies like Apple expanding their manufacturing operations in the country.
However, India faces challenges in more advanced technology sectors like semiconductors, where competitors like South Korea and Taiwan hold stronger positions. Additionally, India remains dependent on Chinese components for several key products, including smartphones, limiting its ability to fully replace China in global supply chains.
Global Economic Risks
The US-China trade war has created instability in global markets, with potential long-term consequences. China’s dominance in rare earth minerals and electronic components could give it leverage in future
trade disputes. Additionally, fears of a large-scale sell-off of US Treasury bonds by China could further shake the global financial system.
As the conflict drags on, businesses and governments worldwide are forced to adapt to shifting trade policies and supply chain disruptions. While some nations like India have gained in certain sectors, the overall uncertainty in global trade remains high.
