NEW DELHI – Tensions in the fraught trade relationship between China and the United States reignited today, Monday, June 2nd, 2025, as Beijing vehemently accused Washington of “severely violating” a tariff truce agreed upon just last month. China’s Ministry of Commerce issued a scathing statement from Beijing, warning of “resolute and forceful measures” in response to what it views as a betrayal of recent de-escalation efforts. This renewed friction matters to New Delhi, as India seeks to navigate a volatile global trade landscape.
The accusation shatters a fragile period of calm that followed high-level trade discussions in Geneva in May 2025. During those talks, both nations had agreed to a temporary 90-day de-escalation of their trade war, with the United States reducing its tariffs on a significant portion of Chinese imports from a recently imposed 145% down to 30%. In reciprocity, China had committed to lowering its duties on American goods from 125% to 10%. This agreement, which began taking effect from May 14th, 2025, had briefly rekindled hopes for a more stable trade environment.
However, the truce appears to have been short-lived. The Chinese Commerce Ministry specifically highlighted several recent actions by the U.S. that it deems in direct violation of the Geneva consensus:
- New AI Chip Export Controls: Beijing condemned the issuance of new guidelines restricting the export of advanced artificial intelligence chips to Chinese firms, citing this as a direct affront to open trade principles.
- Curbs on Chip Design Software: China also pointed to recent U.S. moves to halt the sale of critical chip design software to Chinese companies, further tightening the technological chokehold.
- Threat to Chinese Student Visas: The Ministry additionally referenced recent announcements by the U.S. administration about plans to revoke visas for a significant number of Chinese students, particularly those in technology and engineering fields, viewing it as discriminatory and undermining trust.
The Commerce Ministry stated that China has been “strictly implementing” its commitments while the U.S. has “unilaterally provoked new economic and trade frictions.” The official statement also pushed back strongly against recent remarks from U.S. President Donald Trump, who on Friday, May 30th, 2025, posted on social media that China had “TOTALLY VIOLATED ITS AGREEMENT WITH US,” without specifying details. U.S. Trade Representative Katherine Tai later clarified that China had failed to remove certain non-tariff barriers as agreed.
The Ministry warned that if the U.S. “insists on its own way and continues to damage China’s interests, China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests.”
This renewed trade friction emerges just months after President Trump and Chinese President Xi Jinping were both present at the APEC Summit in Lima, Peru, in November 2024. While no major breakthrough was announced there, the recent Geneva talks had been seen as a positive development, making today’s aggressive posture from Beijing particularly striking.
India’s Calculated Gamble Amidst Escalating Tensions
For India, located in New Delhi, the renewed U.S.-China trade spat presents a complex blend of challenges and opportunities. On one hand, a prolonged slowdown in global trade and a potential recession, as warned by institutions like JP Morgan Research which has raised the likelihood of a 2025 recession, could directly impact India’s economic growth, particularly its vital IT services exports that rely heavily on U.S. demand. Indian IT stocks, including Mphasis and Persistent, saw declines today, reflecting investor concerns.
However, many Indian policymakers and businesses view the persistent U.S.-China decoupling as an opportunity to bolster India’s position in global supply chains. The “China Plus One” strategy, where global manufacturers seek to diversify their production hubs away from China, has gained significant momentum. India, with its vast market, growing digital infrastructure, and Production Linked Incentive (PLI) schemes, aims to attract companies looking for alternative manufacturing bases. Sectors like electronics, textiles, and auto components could see increased investment and export orders as firms pivot from China. For instance, Micron Technology is already setting up a facility in Gujarat.
The escalating “chip war” between the U.S. and China, particularly the restrictions on advanced semiconductors, also creates a unique opening for India. New Delhi is actively pursuing its own ambitious semiconductor manufacturing plans, backed by a $10 billion incentive program. The U.S. has been encouraging closer ties with India in this strategic sector, as seen in the iCET (Initiative on Critical and Emerging Technologies).
Despite the potential gains, India also faces direct implications. U.S. President Trump recently announced a 50% tariff on steel and aluminum imports to the U.S., effective from June 4th, 2025, which could affect India’s nearly $5 billion export sector in these goods. India’s Commerce Minister Piyush Goyal, speaking from Paris today, stated that India and the U.S. are “working together” on a bilateral trade agreement to address such issues, urging a “wait and watch” approach. India is particularly keen on securing a complete exemption from the 26% reciprocal duty previously imposed by the U.S.
Ultimately, India’s ability to capitalize on these global shifts will depend on its swiftness in implementing domestic reforms, enhancing manufacturing capabilities, and securing beneficial trade agreements. As the world’s two largest economies engage in a high-stakes trade confrontation, India finds itself in a pivotal, albeit sensitive, position, striving to convert global volatility into domestic economic advantage.
