The global trade landscape is undergoing significant changes in 2025. The United States and India are close to finalizing the long-stalled bilateral trade agreement. The US side plans to significantly reduce tariffs on Indian goods from the current high of 50% to 15%-16%. This trade breakthrough spanning energy, agriculture and manufacturing not only directly points to the $500 billion trade target between the United States and India, but also hides the deep-seated game of global supply chain reconstruction, triggering a chain of speculations in the market about the trade triangle and industrial transfer among China, the United States and India.

The core of the current trade negotiations between the United States and India is a precise two-way concession.

The key highlight is the significant reduction in tariffs. The United States will abolish the 25% punitive tariff and the 25% equivalent tariff on Indian oil purchases from Russia, reducing the overall tariff rate to the range of 15% to 16%, covering India's advantageous export sectors such as textiles, gemstones, leather, and construction machinery. This will directly relieve the pressure of India's exports to the United States having declined for four consecutive months - data shows that India's exports to the United States dropped from a peak of 8.8 billion US dollars in May to 5.5 billion US dollars in September, evaporating 3.3 billion US dollars in three months.

India has offered a key bargaining chip in exchange for tariff reduction. It has promised to gradually cut down on Russian oil imports, and its state-owned oil refiners and Reliance Industries have begun to shift their procurement to the Middle East. Meanwhile, India will ease the import restrictions on non-GMO US corn and soybean meal, opening up a market worth hundreds of billions for US agricultural products.

Both sides plan to establish a regular review mechanism for tariff levels and market access to build a long-term framework for subsequent trade cooperation. The advancement of the US-India trade agreement is essentially a dual game of political will and market rules, and its influence has radiated to major economies around the world.

The United States has reaped multiple benefits. It has not only expanded its export channels for energy and agricultural products, easing domestic industrial pressure, but also deepened its economic influence on India through trade ties, paving the way for the implementation of the "Indo-Pacific Economic Alliance". More importantly, by leveraging India's cheap labor force, the United States is attempting to build a supply chain backup for "China substitution".

India faces both opportunities and risks. A reduction in tariffs will directly boost orders for export enterprises, but expanding imports of US agricultural products may impact its domestic agricultural system, while reducing Russian oil imports could push up domestic energy costs. In addition, 70% of air conditioning compressors and 58% of mobile phone components in India's manufacturing industry rely on imports from China. The "de-Sinicization" of the supply chain is unlikely to be achieved in the short term.

One of the core demands of the United States in promoting trade cooperation between the US and India is to build a technology and industrial alliance that excludes China. This brings three direct pressures to China: labor-intensive products from India may squeeze out China's share of exports to the US; The cooperation among the United States, Japan, South Korea and India in the fields of semiconductors and critical minerals may tighten the technological blockade against China. The competition for global resource pricing power has intensified.

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