The US has recently paused reciprocal tariffs on electronics, which will help India to increase its electronics exports to the US. The tariffs pause is for only 90 days, which will also redefine the global tech supply and world trade. The question is how the China Plus One strategy impacts India
There is a 90-day pause on the global tariff, but the base tariff of 10% is still applicable. The good news is that the trump administration has removed the reciprocal tariffs on electronics has been removed. The levies, which include extra country-specific taxes on top of a standard 10% levy on all imports, appear harsh on paper. China has been particularly heavily impacted, with tariffs on some devices, such as semiconductors and cellphones, potentially reaching 125%. In case you missed it, there isn’t a tariff pause for China.
Smartphones, computers, semiconductors, and other electronics will not be hit by reciprocal tariffs. This is a big relief for Apple, which imports a lot of smartphones from China, but now, due to tariffs, it will rely on countries like India and Vietnam.
When it comes to China, thereโs a lot more at risk than simply the trade imbalance. The US is set on undermining Chinaโs supremacy across industries. China, meanwhile, has no intention of submitting.
Now, let’s imagine a situation in which China’s exports are subject to higher overall reciprocal tariffs than, say, those paid by Brazil and India.
What will happen if tariffs are imposed permanently?
First, the obvious: China’s exports of electronics will suffer. That’s intentional. It’s unclear what happens next.
For example, India has a tariff of 26%, which is higher than Brazil but lower than China. That might not seem like much, but every percentage point matters in a high-volume, low-margin sector like cellphones. Indeed, the Department of Commerce’s ICEA reports that India’s smartphone exports have increased from $3 billion in FY20 to over $24 billion in FY25. An impressive sevenfold increase in just five years. On the Other hand US imports around $250 billion electronics products, which is a great opportunity for India to increase its exports.
This has happened because of the government PLI scheme; now focus should be on increasing exports. The problem is that imports still account for between 70 and 80 percent of a smartphone’s worth. Despite the export headline, India only receives a small portion of the overall value since components like chipsets, screens, camera modules, and batteries are imported.
The new PLI for components seeks to address that. India’s ability to localize even half of that supply chain would revolutionize profitability, resilience, and long-term scale in addition to exports. India’s smartphone export game is only getting warmed up with trade agreements on the table, a push into Africa and Latin America, and increasing interest from international IT suppliers.
One country that benefits from a flat 10% tariff is Brazil. Additionally, Apple is secretly renovating its Sรฃo Paulo facility, according to Exame, a well-known Brazilian business and economics journal. Up until recently, it primarily put together older models for local retail sales. That is evolving. Upgrades are being made to production lines. The iPhone 16โincluding the Pro modelsโcan now be assembled locally thanks to approval from Anatel, Brazil’s communications authority. India may find itself undercut on pricing, particularly for high-end phones, if Apple chooses to ship from Brazil to the United States. Vietnam is also sitting idle. It is reportedly discussing a zero-tariff agreement with the United States. India’s 26% appears more like a tax than a moat if it passes.
Only Time will tell If India will capture US market and increase its exports.
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