Opinion J D Vance visit, bilateral trade and how to deal with China

US Vice President J D Vance’s visit to India comes in the midst of a global trade war. In this time of uncertainty, however, the first high-level visit from the Trump administration also signals the strong political backing in both countries for a trade deal. The two sides “welcomed the significant progress” in negotiations over the agreement. This political push comes ahead of a three-day visit to the US by Indian government officials, led by chief negotiator Rajesh Agarwal. Reportedly, 19 chapters are under negotiation, covering areas such as tariff and non-tariff barriers and rules of origin, among others. The White House also articulated the “goal of enhancing bilateral trade and supply chain integration in a balanced and mutually beneficial manner”.

As per the White House, more than 75 countries have approached it in order to “discuss new trade deals”. But US Treasury Secretary Scott Bessent is said to be prioritising India, along with Japan, South Korea, Australia and the UK as “among his top targets for new trade deals”. The Japanese trade delegation met with US officials a few days ago. But President Donald Trump, who was part of the negotiations, expanded their scope to include non-tariff issues as well. South Korea is holding talks this week. Trump has said that the US is having “nice conversations” with China. But, on its part, Beijing has warned countries against entering into trade deals with America at its expense. The Chinese Ministry of Commerce has said that “if this happens, China will not accept it and will resolutely take reciprocal countermeasures”.

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On Tuesday, the IMF slashed global growth forecasts with trade uncertainty affecting economic activity. It now expects the world economy to grow at 2.8 per cent in 2025, down 50 basis points from its earlier estimate. All countries are likely to take a hit. The Fund now projects the US to grow at 1.8 per cent, down 90 basis points from its earlier assessment. China is expected to grow at 4 per cent, 60 basis points lower than its earlier estimate, while India’s growth has been marked down by 30 basis points to 6.2 per cent. In this uncertain global environment — the IMF has also cut global trade growth by almost half — as New Delhi moves ahead with the US trade deal, the importance of China to the global trading system, and to India, cannot be understated. China is at the centre of global manufacturing supply chains. In 2023-24, India-China bilateral trade stood at a staggering $118.4 billion. A trade deal with the US should not be seen as being adversarial vis-a-vis China. The trade dynamics between the countries are complicated and challenging; they will require deft handling.