India could have its ‘Latin America moment’ amid ongoing US–China trade war, says Richard Baldwin

Drawing a parallel with post-World War Latin America, which had very little manufacturing but began industrialising as Britain — then the global manufacturing powerhouse — weakened, RICHARD BALDWIN, Professor of International Economics at IMD Business School, said in an interview with RAVI DUTTA MISHRA that middle powers like India could similarly secure a foothold in global supply chains amid the ongoing US-China trade war. Baldwin suggested that India should, on the one hand, use WTO compliant measures to curb dumping of Chinese goods into its borders — an inevitable consequence of the trade war — and, on the other, pursue more trade agreements, as the US accounts for only 15 per cent of global imports, leaving 85 per cent of the global market still open for Indian goods where trade liberalisation will benefit trade. Edited excerpts:

Trade deals are increasingly being negotiated along geo-political lines. The US is in talks with India, Japan, South Korea, and China is reaching out to Vietnam and Cambodia. How are you reading this?

This is all about the strategic competition between . In the US, globalisation and automation have hit the middle class, and the middle class is now angry, having elected a populist who happens to favour protectionism. The entire American elite blames foreigners. But this is not a new story and it is going to persist because the middle-class fury in the US will continue — these tariffs will not fix it. That’s the first thing.

The second is that China has changed its role in the world over these 20 years, becoming a manufacturing superpower that has threatened the manufacturing base everywhere. The US is reacting strongly, but even Japan, Korea, and the EU are responding to China’s quick rise. China has also become more aggressive in the South China Sea, for example, with its military bases and confrontations with the Philippine Navy. So both the US and China have changed the way they deal with the world, and the rest of the world must adapt.

Where do you see India in the global trade war?

If high tariffs on China stay, it’s advantageous for large emerging markets because China was a big competitor and has been hobbled. Companies will diversify into India to manage risk. However, note that the April 2 tariffs did not apply to pharmaceuticals and electronics.

So perhaps the two sectors where India could have benefited most from China being hindered in the US have been exempted. Thus, the advantage India might have gained from the April 2 tariffs is modest — but this could change. From a geo-economic perspective, anything that is bad for .

Having this kind of trade war, where both the US and China are disrupting supply chains, helps other countries get a foot in the door. Let me give you an analogy.

In the 19th century, Latin America had very little manufacturing because British dominance in manufacturing effectively de-industrialised much of the world, including India. Britain was so powerful that it prevented many regions from developing their own industries. However, World Wars I and II disrupted global sea trade and opened the door for Latin America to start industrialising. War disruptions can help secondary producers find opportunities.

Similarly, when it comes to global value chains today, companies are now looking to diversify out of China, and India is one of the destinations they are considering.

How should India tackle dumping while making use of opportunities for free trade agreements at the same time?

You do both — and you are doing both.

Imposing tariffs against dumped goods is entirely WTO-consistent, and all countries do it routinely. It is almost inevitable that China will dump manufactured goods globally, leading to cascading tariffs, as seen in the case of steel. When the US raises tariffs, Europe follows, and the same is happening now more broadly with manufactured goods. This cascade leads to selective tariff increases, mostly against China.

Then there is the domino effect — you tend to sign trade agreements with major partners.

As the US and China , third countries become closer trading partners. For instance, the EU is increasingly interested in signing agreements with India.

Thus, more bilateral anti-dumping duties combined with more bilateral free trade agreements is the right path.

Remember, the US accounts for less than 15 per cent of world imports — 85 per cent of the global market remains accessible. Maintaining access through smart FTAs while managing dumping risks is crucial.

A section of policymakers believes the China-led RCEP is good for India, while others think FTAs with Western countries make more sense. From a geo-economic perspective, what’s the right balance?

The US–China trade war hasn’t fundamentally changed India’s political calculus on Regional Comprehensive Economic Partnership (RCEP) or other trade alliances.

India previously assumed that the US would broadly support it against China. That assumption is now less reliable. Under Trump, the US appears less interested in being a dependable ally.

Thus, the Regional Comprehensive Economic Partnership may now seem geopolitically less risky than before. However, fundamentally, these are political-economic choices. The bigger picture hasn’t shifted dramatically due to the US–China rivalry. The priority should be managing dumping risks, signing smart FTAs, and committing to a rules-based system. Whether India joins RCEP or leans West is a secondary calculation.

Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets.