Opinion | 6 Ways China Beat Trump At Trade Negotiations - And What India Can Learn
As the US presses India with a "take-it-or-leave-it" offer, New Delhi must draw critical lessons from how China successfully negotiated with Washington in June 2025.
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- From: India News Bull
The US-China agreement of June 2025 to relax export controls represents a pivotal shift in their trade tensions. Despite President Trump's aggressive rhetoric, the final deal reveals China's diplomatic triumph. Beijing effectively controlled the negotiation framework, timing, and conditions. China successfully secured the removal of critical US restrictions while making minimal, ambiguous, and easily reversible commitments. Six strategic factors enabled China to extract concessions and establish a trade truce on favorable terms.
First, China strategically leveraged its dominance in rare earth elements, particularly heavy rare earths like dysprosium and samarium—critical components for US defense systems, electric vehicle motors, and advanced electronics. Unlike previous decades, China had consolidated and nationalized its entire rare earth supply chain, eliminating independent miners and implementing strict export licensing under military-industrial regulations. This created a credible threat of supply disruption for US defense and technology manufacturers, compelling Washington to prioritize restoring access to these materials.
Second, China implemented comprehensive legal frameworks, including the Export Control Law and Anti-Foreign Sanctions Law, signaling that Western corporations could face legal consequences for complying with US sanctions. This created a regulatory predicament for companies: risk violating US regulations or face penalties in China. The deliberate ambiguity of these laws increased risk assessments related to US restrictions and generated pressure from stakeholders within the American corporate sector to seek diplomatic solutions.
Third, Xi Jinping operates within a system of centralized authority, consistent long-term policy direction, and comprehensive narrative control. In contrast, Trump favors dramatic gestures, rapid escalation cycles, and reactive policymaking. China framed the negotiations as defending national sovereignty against "economic bullying," mobilizing domestic support while presenting any compromise as strategic resistance. The absence of political costs for delaying negotiations provided Beijing with structural patience.
Fourth, China demonstrated remarkable industrial adaptation and technological resilience through state-coordinated initiatives. Huawei exemplifies this approach. Despite US restrictions on chipmaking equipment and AI accelerators, Huawei launched a 5G smartphone in 2023 using domestically produced chips via chiplet "stacking" technology. The perception that Chinese industry could circumvent Western technology restrictions strengthened Beijing's negotiating position and undermined US assumptions about maintaining technological advantages. This industrial self-sufficiency signaled to US negotiators that restrictions were becoming increasingly ineffective and potentially self-defeating.
Fifth, China employed precisely targeted trade retaliation and strategic concessions. Rather than implementing broad retaliatory measures, China imposed specific trade restrictions on politically sensitive US exports (such as ethane) while selectively granting rare earth export permits to European companies (including Volkswagen suppliers). This strategy effectively divided Western allies and demonstrated Beijing's ability to fracture pressure coalitions. Meanwhile, the US struggled with coalition maintenance and faced increasing domestic opposition from industry groups affected by export controls.
Finally, China's decreasing reliance on imports—particularly from the US—provided strategic insulation. Xi Jinping's policy shift toward economic self-sufficiency, emphasizing industrial localization, software independence, and domestically-focused economic stimulus, has fundamentally reduced China's import requirements. While Chinese imports have remained static, exports have increased by 33% since 2022. This transformation renders tariff threats less effective as China's need for imports has diminished. As noted by The Wall Street Journal, "China's vision of trade is exporting without importing," which significantly reduces US leverage based on market access.
As the US presents India with a "take-it-or-leave-it" proposal in bilateral trade negotiations—demanding extensive access to India's agricultural, dairy, and pharmaceutical markets—New Delhi must extract valuable lessons from China's successful negotiation approach in June 2025. Unlike India's current reactive stance to ultimatums, China entered discussions with established leverage: control over rare earth exports, retaliatory legal mechanisms, and an insulated domestic economy. India must transform its negotiation strategy from defensive tariff protection to assertive, leverage-based diplomacy anchored in strategic chokepoints, industrial capabilities, and phased reciprocity.
India possesses unique strengths that can serve as negotiation leverage. China controlled negotiations by targeting materials like dysprosium that the US couldn't readily substitute. India maintains significant advantages in bulk generic pharmaceuticals, vaccine production, and digital services—critical components in global supply chains. Rather than preemptively offering tariff concessions, India should implement targeted export approval mechanisms or destination-specific licensing for select pharmaceutical categories where US import dependence is structurally significant. For digital services, India should temporarily suspend new cross-border data transfer authorizations in sectors like fintech and health-tech until securing commercial access and data equivalence frameworks from the US.
Additionally, India must abandon its concession-oriented approach in market access negotiations and establish a strict reciprocity framework. If the US demands tariff reductions and removal of quantitative restrictions in agriculture, dairy, and pharmaceuticals, India must require binding and verifiable commitments in return, such as regulatory streamlining, mutual recognition of standards, and preferential access to US government procurement. These should be structured as enforceable deliverables rather than political assurances. China employed this strategy effectively: export licenses for rare earths were selectively granted to allies and withheld from adversaries until key concessions were secured. India cannot allow sensitive sectors to be opened without tangible, sector-matched benefits. Concessions must be calibrated and time-limited, with expiration clauses if the US fails to reciprocate.
Furthermore, India must address the regulatory imbalance embedded in US trade practices. While headline tariffs may appear modest, US non-tariff barriers—including sanitary and phytosanitary standards, drug import protocols, and origin compliance measures—function as de facto trade restrictions. Indian shipments are frequently rejected for minor technical violations, creating a deterrent effect on exporters. The recent $500,000 consignment of Alphonso mangoes illustrates this issue. These barriers are often opaque, discretionary, and non-negotiable. India must require binding transparency commitments, risk-based inspection protocols, and pre-clearance mechanisms as prerequisites to any tariff adjustments. The US-UK "Economic Prosperity Deal" signed in May serves as a cautionary example: despite tariff concessions, the US maintained core restrictions, providing London with limited commercial benefits. India must avoid accepting an agreement where surface-level wins conceal structural disadvantages.
Lastly, India must establish its own negotiation structure and sequencing. A modular, multi-phase agreement framework is essential. Negotiations should begin with trade in services and digital commerce, where India enjoys a surplus and global competitiveness. Tariff liberalization in agriculture, processed foods, and medical devices should be reserved for subsequent phases, contingent upon high-value reciprocal benefits, such as technology access, joint R&D initiatives, and strategic investment opportunities.
The US cannot expect a comprehensive agreement aligned with its electoral timeline. India's goal must be to maximize strategic value per concession, rather than rushing to conclude a deal for diplomatic expediency. China succeeded by controlling the pace and scope of engagement. India must now adopt a similar approach—with precision, leverage, and a clear understanding of its national interests.
(Aditya Sinha (@adityasinha004) writes on macroeconomic and geopolitical issues.)
Disclaimer: These are the personal opinions of the author