Tariff Truce Between U.S.-China Sparks Mixed Reactions in Indian Industry While certain companies term it as a "loss of steam for India's momentum", others claim that this is just a "temporary headwind".

Indian industry leaders and government bodies are divided in their response to the recent easing of the U.S.-China tariff war that has been brewing since April 2025. For the next 90 days, the United States has announced that it will bring down the tariff rate imposed on China from April's 145 per cent to 30 per cent. In response, China has cut the duties on U.S. imports to 10 per cent from 125 per cent. While certain companies term it as a "loss of steam for India's momentum", others claim that this is just a "temporary headwind".

"The recent pause in tariffs on Chinese goods by the U.S. has been a major development, a loss of steam for the momentum that India was building in the 'China Plus One' framework. Over the last few years, we have witnessed a rising acceptance of India as a dependable, scalable, and democratic alternative to China for manufacturing and supply chain operations. However, the tariff relief will make Chinese goods competitive again just in time for the U.S. market, where, unlike before, the immediate urgency to diversify away from China may get diluted," said Appalla Saikiran, founder & CEO, SCOPE.

An official of a leading manufacturing company in India said the U.S.-China development was very recent to understand its impact on Indian sectors that were expected to benefit from the heightened tariff rates. "We are employing wait and watch before commenting on something, as there has been a lot of back and forth in their policies before," the senior official said.

The Federation of Indian Export Organisations (FIEO) said the recent development was both a challenge and an opportunity for India.

"While such developments are broadly positive for global trade stability, they present both challenges and opportunities for India," said S.C. Ralhan, president, FIEO.

The FIEO president said the tariff reduction will likely result in a surge of U.S.-China bilateral trade in high-value segments such as electronics, machinery, and chemicals.

"However, India can leverage this shift to strengthen exports in sectors that remain relatively insulated from US-China trade, such as Pharmaceutical APIs, Gems and Jewellery, Engineering goods, Organic chemicals, and IT-enabled services etc.," he added.

The president of the apex industry body said the tariff cuts' temporary nature may lead companies to hedge against future volatility by expanding manufacturing in India, especially in electronics, auto components, and textiles.

The U.S. has suspended a 26 per cent tariff, initially imposed on April 2, on Indian imports till July 9.

After the announcement, Ritesh Goenka, managing director, Damson Technologies, had said the U.S. has always been a key trading partner for India, and the new tariffs will steer the global electronics industry in a new, uncertain direction.

"But uncertainty doesn't always signal a setback. Indian electronics players should recognize that when tariffs rise in competing economies, global investors look for alternative partners. India is well-positioned to step in here. As one of the largest consumer electronics markets in Asia-Pacific, India already has the resources, skilled workforce, and operational efficiency required to support large-scale production. The 145 per cent tariff on Chinese exports presents a timely opportunity for us to step up and position India as the next global manufacturing hub," Goenka had said.

Does this change with China once again entering the ring? "This may intensify competition for Indian exporters in third markets like Southeast Asia, Africa, and Latin America, where India has recently made inroads, capitalizing on US-China trade disruptions," FIEO president Ralhan said.

Some industry leaders, however, still believe that any new development in the tariff rates concerning other countries won't affect India's growth path.

"India is irrevocably on the path to manufacturing excellence. The 'China Plus One' strategy is a reality, and tariffs, temporary or permanent, will not change this. India's commitment to infrastructure development, digitalisation, innovation, emerging technologies, and ease of doing business long term will continue to drive investment and manufacturing growth. The India story is backed collectively by political will and the 1.4 billion strong Indian population with over 50 per cent below the age of 25," said Terrence Miranda, managing director, Phillips Machine Tools – a subsidiary of Philips Corporation.