US-China trade rivalry fuels new global “China shock” impacting India and other economies

Intensifying trade and geopolitical competition between the United States and China is creating a second “China shock”. China posted a $1.2 trillion trade surplus in 2025 and is expanding its export footprint in high‑tech sectors such as electric vehicles, solar panels, batteries and wind turbines. The surge is pressuring manufacturers in the United States, Europe and developing markets, prompting protectionist measures and heightened trade friction.

Analysts say the shifting landscape also offers opportunities for third‑party exporters. India could benefit from the “China+1” strategy, with its electronics, semiconductor, pharmaceutical, textile and chemical sectors positioned to capture demand as multinational firms diversify supply chains. However, rising protectionism, tariff hikes and divergent standards could raise costs and disrupt Indian exporters, making the outcome uncertain for the country and other neutral economies.