The fresh round of US-China trade tensions has created new uncertainties over India’s trade prospects. While it may give some export sectors an edge over China in the US market, the higher tariff could also lead to cheaper Chinese goods flooding the Indian market. The US has announced a 100% additional tariff on Chinese goods starting November 1, 2025. The move effectively raises the total tariff rate on Chinese imports to about 130%, adding uncertainty to the ongoing US-India trade talks, trade experts said.
India is likely to face certain trade challenges due to this heightened trade tension between US and China. “India will suffer collateral damage,” said Abhijit Das, former Head of the Centre for WTO Studies, Indian Institute of Foreign Trade.
As India and China work to recalibrate trade ties, Beijing has agreed to export rare earth magnets to India only if they are used for domestic purposes and not diverted to the US. Indian firms have issued end-user certificates assuring that the materials will not be deployed for weapons of mass destruction or re-exported.
“No deal with the US is ever final. The much-publicised US-China ‘Phase One’ trade deal of 2025, which capped US tariffs at 30% and China’s at 10%, has already been overtaken by the new 100% duty order. India must negotiate carefully and on equal terms, ensuring reciprocity and preserving strategic autonomy,” said Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI).
With the higher US tariff on China, India’s import from China will be impacted as well. “It is tit for tat measure by China,” said Das. With India trying to strike a balanced relation with both the US and China, this tariff further complicates the situation for India.
Posting on Truth Social, US President Donald Trump accused Beijing of taking an “extraordinarily aggressive” stance on trade and warned that Washington would respond “firmly.” The escalation follows China’s October 9 decision to impose sweeping export controls on rare earth elements, critical for US defense, electric vehicle, and clean-energy industries.
With control over nearly 70% of global rare-earth refining capacity, China has tightened its grip on the mineral supply chain, effectively weaponising its dominance. However, there is a silver lining too for India, said experts.
“India could benefit through export diversion in sectors like apparel and textiles, pharmaceuticals, chemicals, machinery and equipment and electronic goods, as American importers will look for cheaper alternative suppliers. However, the extent of gains will depend on India’s ability to scale up manufacturing and logistics quickly, and reduce the trade transaction costs,” said Rajan Sudesh Ratna, Deputy Head and Senior Economic Affairs Officer at the United Nations ESCAP.
Despite all these tariff tensions, Indian exporters are keeping a close eye on the US Supreme Court decision of reciprocal duties on 5 November 2025.
