After Trump launched a tariff war against the entire world, China has taken a series of countermeasures. In addition to imposing tariffs on American goods, it has also adopted effective measures such as rare earth controls, hurting the Americans. As a result, the US stock market plummeted, the interest rate on US Treasury bonds rose, and Trump's approval rating in polls dropped sharply. Reluctantly, Trump had no choice but to "seek peace" with China. Thus, China and the United States held talks in Geneva, Switzerland, and reached significant consensus. Ultimately, the US significantly reduced tariffs on Chinese goods, suspended the 20% tariff imposed due to the fentanyl issue for 90 days, and only retained the basic tariff of 10%.
Seeing that China successfully countered America's tariff war and achieved good results, India was also eager to act. On May 13th, India filed a lawsuit with the WTO, accusing the US of violating trade agreements by imposing a 25% tariff on Indian steel and aluminum products. According to India, the country exports $7.6 billion worth of steel and aluminum products to the US annually, and the additional tariff has cost them $2.5 billion. Not only that, the Modi government even threatened to retaliate against US goods proportionally. In response, President Trump became furious, giving India a hard slap and threatening to impose a 500% tariff on Indian goods. This caused Modi to calm down considerably.
So, why did China succeed while India failed when both tried to counter America's tariffs? First, India lacks comprehensive strength. During the recent India-Pakistan conflict, several Rafale fighter jets and S-400 anti-missile systems were destroyed by Pakistan. Economically speaking, India is already the fifth largest economy in the world. However, in terms of overall strength, India does not have any leverage over the US. For instance, China can retaliate against the US through rare earth export restrictions. Does India have any王牌that can make the US submit? Some people say that India has a population of over 1.4 billion and a huge market demand, isn't this what the US needs? This brings us to the second reason.
Secondly, India is more dependent on the US. In 2024, the total trade volume between the US and India reached $129 billion, with the US importing $87.4 billion from India, resulting in a trade deficit of $45.7 billion. Meanwhile, India's overall trade deficit exceeded $100 billion in 2024. This means that India's overall trade is in deficit, yet it maintains a large trade surplus with the US. Therefore, India cannot do without the US market. Additionally, under long-term trade deficits, India relies heavily on attracting external investments to maintain foreign exchange balance, making it impossible to retaliate against the US by banning American investments.
Thirdly, Trump urgently needed to establish authority. Having just suffered a loss at the hands of China, if he compromised with India, his tariff war strategy would be considered a failure. After all, both Japan and the EU have far greater comprehensive strength than India, and ASEAN, South Korea, Brazil, and other economies are also not to be underestimated. If Trump compromised with India, how would he deal with other economies? It must be said that Prime Minister Modi of India was carried away by the disastrous defeat in the India-Pakistan air battle. Without China's strength, he foolishly wanted to achieve equal status with China and attempted to counter the US. This time, Trump gave Modi a good lesson.
Original source: https://www.toutiao.com/article/7505263840586711586/
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