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Trump tariff war with China and China India trade: China on Friday (Apr 11) announced fresh tariffs of 125 per cent on the US as a tit-for-tat for reciprocal tariff hikes by US President Donald Trump. While Beiing is on a collision course with the US, including possible lawsuits in the World Trade Organization, its leadership is also courting other countries like India. With India, Beijing wants to rejig the relationship, with Chinese leadership saying the 'elephant and peacock should dance.'
But the truth is, India's trade with China has been one-sided for years, with China having a major advantage.
For several years now, China has been enjoying a trade surplus of more than $100 billion with India.
For context, the trade deficit of the US with China was $295 billion in 2024, an issue at the core of Trump's decision to impose higher tariffs on Chinese goods.
India and China have long history of trade
In spite of political differences and military standoffs over the decades, India's trade with China has mostly continued unhindered. China remains one of India's top trading partners and often became number one.
The trade has in fact seen exponential growth since 2000s, with China emerging as the largest goods trading partner of India by 2008. The trade figure crossed $100bn multiple times.
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The two countries had established a Joint Economic Group as far back as 1988.
What are the goods traded between India and China?
China's exports are essential for Indian industries, as they are mainly manufactured goods and intermediate products .
Electrical and electronic equipment, particularly telecom and smartphone parts are a key component of this.
India's exports to China, on the other hand, is a much narrower basket, constituting mostly raw materials, primary commodities, agricultural and fisheries products.
Specifically, these include iron ore, cotton, copper, diamonds, cotton, coffee, tea, and spices.
A widening trade deficit
It is clear from Indian government data that the trade imbalance with China is in fact the largest single deficit India faces with any country.
This deficit has only been widening in the recent years, except for a dip in 2020 due to the Covid pandemic.
And the deficit crossed $100 billion in 2022.
After a gap of two years, China became India’s top trading partner in 2023-24, surpassing the US, shows data from Global Trade Research Initiative (GTRI).
Here is a breakdown of total trade deficit in the past few years:
2018: US$58.04 billion
2019: US$56.95 billion
2020: US$45.91 billion (this was down due to the Covid pandemic impact)
2021: US$69.56 billion
2022: US$101.28 billion
The data from 2023 shows that China exported goods worth US$121.97 bn to India whereas India's exports to China stood at $16.25 bn. This means there was a trade deficit of nearly $106 bn, in favour of China.
This data clearly shows that India has always been a reliable trading partner of China though there were political differences and trust deficit when it comes to national security matters. Perhaps the two countries should sit down together and address ways to reduce the trade imbalance. China's overtures to countries across Asia and Europe is mainly aimed at protecting its economic interests amid the trade war with the US. It might want other countries to import more. At this point, given the data, it may not be a good idea for India to import more from China.