US-China trade war: Counting chickens

Policymakers and pundits in Delhi have been quick to declare the United States (US)-China trade war a golden opportunity for India.

- DEBASHIS BASU

As supply chains fray and geopolitical tensions deepen, could India finally seize a slice of China's enormous export pie? On the surface, the logic is appealing. If tariffs and restrictions make Chinese goods less welcome in American ports, surely the world's largest democracy—with its low labour costs and burgeoning industrial base—can fill the gap. But beneath the optimism lies a more sobering reality.

To begin with, the scale of China's export machine is staggering. In 2024, it shipped goods worth $439 billion directly to the US. Add indirect exports—those routed via Vietnam, Malaysia, Cambodia, and Mexico—and the figure climbs even higher. Replacing this volume is no small feat. India and its peers simply do not have the industrial depth, logistical capability, or policy clarity to substitute Chinese supply at scale.

The second issue is timing. Trade between Washington and Beijing has collapsed. But the idea of a long, grinding standoff is unrealistic. Within weeks, many American store shelves would begin to empty. China-based sellers constitute more than half of Amazon's top-performing vendors. Should imports of electronics, toys, apparel, and household goods remain stalled, prices would rise sharply, fuelling higher inflation expectations in a self-reinforcing cycle and ultimately shaking confidence in US financial assets. Pressure for a resolution—any resolution—will mount quickly. Any surge in Indian exports, therefore, is likely to be short-lived. But some commentators think they have spotted a silver lining nevertheless.