But it is only a tactical retreat.
The truce was an outcome of marathon negotiations in Switzerland, a neutral country. Trump supporters will say that he achieved the goal of getting China to promise greater purchases of US goods, especially farm and energy products, and some concessions on intellectual property rights.
Also Read: Will a US-China trade agreement work? Don’t count on it
China has pledged to improve protection of trade secrets, by stricter enforcement against unauthorized disclosures by government personnel and criminal penalties for trade-secret theft. They also promised more vigorous protection of pharma patents, revisions in certain patent and trademark laws, a crackdown on counterfeiting and piracy, and more effective enforcement in general.
The Trump camp sees these as important, but outcomes will depend on enforcement and it will take time before we know whether the US tariff threat has really worked.
Despite China’s tariff rollback, it has not changed its industrial policy and subsidy regime for exports, something that bothers the West, which accuses Beijing of abusing the world trade system. However, the relief granted by the US to Chinese imports is real and significant.
In this retreat, Trump was possibly influenced by harsh stock and bond market responses, corporate pushback and fears of a retail inflation spike due to prices pushed up by tariff hikes. The US economy logged a contraction in this year’s first quarter and if another quarter goes the same way, it would spell a recessionary environment.
Also Read: Tariff whiplash: The US truce with China offers hollow relief
Inflation caused by higher import duties will adversely affect the mid-term elections to Congress due in 2026, which Trump cannot afford. His narrative has shifted from punitive action against trade partners towards economic growth, attracting investment, ensuring stability and peacemaking in the world.
In spite of tariff relief for China, it is still seen by the US as a long-term adversary and a formidable rival in the realms of technology and geopolitics. Similarly, China has not changed its strategic plans of boosting domestic consumption, picking key sectors for subsidies as part of its industrial policy and expanding its sphere of influence through debt-and-aid diplomacy. Its support of Pakistan is a case in point.
So, both the US and China have taken a tactical retreat while retaining their long-term strategic stance. In that sense, both have ‘blinked’ in this tariff war, but only for now. An exact scorecard of who won this round is futile. Keep in mind that the truce is only for 90 days, which in today’s volatile world is a very long time. A lot can change in the interim.
The implication for India is serious. Such a quick US-China tariff retreat means that a major diversion of trade from China in India’s favour, with a boom in US sourcing from India, is unlikely. India’s opportunity of attracting foreign investment based on increased risk perceptions of China and the resultant China-plus-one window remains largely unrealized, but that opening is now closing. Other countries like Vietnam and possibly Mexico have made tangible gains from supply-chain diversification, a phenomenon that began 10 years ago.
Also Read: The time is right for a reset of India’s trade ties with China
Now Trump seems displeased with plans for US investments in India. He practically told Apple’s CEO Tim Cook not to expand iPhone production in India. If Apple stops its expansion here or rolls back production, it would be a rude wake-up call. The iPhone production and export success is the brightest silver lining of India’s production linked incentives (PLI) scheme, even if the actual value added by iPhone assembly in India is very small.
India will now be under pressure to sign a trade deal (and not a full-scale free trade agreement) with the US, which may oblige us to increase our purchases and reduce import tariffs on goods. India’s continued access to the US market is crucial for the growth of our software-related exports.
As the US’s temporary truce with China has reduced India’s space for manoeuvre, we must strengthen domestic reforms: Upgrade human capital through skilling and education reform, invest in digital public infrastructure and attract foreign investment to make India a global hub for manufacturing.
The truce indicates that Trump does not mind tactical retreats and reinforces his transactional image. But his strategic thrust won’t change direction. He might insist on a harder pivot away from China in semiconductors, AI and green technology. China will remain a rival.
Which means that India will have to balance its commitments between coalitions like BRICS and groupings like the Quad and IPEF. We will have to accelerate trade deals with the EU and others; exports need to be a major driver of growth, for which India needs lucrative foreign markets. Also, such deals enable transfers of technology and management practices while aiding India’s integration with global value chains.
New Delhi will also have to pursue compartmentalized engagement with China, with trade and commerce as one, government and military affairs as another, and people-to-people social, cultural and educational matters as a third compartment. As India and China make up 40% of humanity and have several areas of common and allied interest, they cannot afford to be hermetically sealed off from each other.
The author is senior fellow with Pune International Centre.
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