India, May 15 -- In a strategic pause on May 12, the US and China resolved to reduce tariffs on their goods temporarily, taking a new turn in the escalating trade war between the two. The new rates came into effect on Wednesday. Additionally, a mechanism to deliberate over economic and trade relations will be set up, with Chinese vice-premier He Lifeng, US treasury secretary Scott Bessent, and trade representative Jamieson Greer spearheading the talks. China pledged to revoke non-tariff countermeasures - a reference to the curbs on the export of critical minerals used in the manufacturing of batteries and other advanced applications. The aim of this pause seems to be to finalise the contours of a broader agreement in due course. Earlier, US President Donald Trump's America First trade policy released in January sought to probe China's practices related to technology transfer, infringements of intellectual property, steering of exports through third countries, and discriminatory trade practices. Bessent has said Washington was keen to discuss the issue of trade deficit, China's currency tweaking, and subsidies for manufacturing. These issues are set to prominently figure in the talks that will take place over the next three months. Both sides have skin in the game and would seek to defuse trade tensions. For Washington, the spectre of shortages due to the imposition of high tariffs loomed large. Besides, small firms in the US faced significant challenges with respect to reworking supply chains amid the tariff tussle. The onslaught on the business bottom line meant that companies would look to lay off workers. This is further corroborated by the Chinese ministry of commerce rationalising that Monday's truce fulfils the expectations of manufacturers and consumers in both countries and aligns with both the interests of China and the US. For Beijing, companies had been grumbling about the issue of involution, which denotes intense competition. China has promoted growth over the years by enormous capital investment that has led to overcapacity. China's large production capacity to churn out cheap goods has meant that any fall in demand affects producers, which results in slashing of prices to remain competitive. Additionally, escalating Trump tariffs raised the probability of Chinese merchandise finding its way into new markets, thereby exacerbating existing tensions. For instance, India's imports from China rose to a new high of $113.45 billion in 2024-25, with the trade deficit touching $99.2 billion. The pushback against the influx of Chinese products has been swift, with nearly 200 complaints, including 37 by New Delhi, filed against Beijing in 2024 at the World Trade Organization. India also levied a 12% tax on some steel imports recently. It may be too early to predict the trajectory of the outcome of talks in Switzerland. During Trump's first term, tariffs had been imposed on Chinese goods to redress the trade deficit. The US and China inked a "phase one" trade deal in 2020 under which, Beijing agreed to increase purchases of American products by $200 billion spread over two years. The Washington-Beijing engagement could lead to China agreeing to buy more US products and allowing more American companies to do business - a favourable proposition for Trump. A thaw also increases the possibility of putting Beijing back in business at the expense of New Delhi. While trade tensions between the US and China intensified, India seemed poised to gain from the contretemps. It held out the prospect of a better trade and investment partnership and greater economic twinning with the West. European Commission President Ursula von der Leyen along with a large delegation of the European Union's College of Commissioners visited India early this year. Prime Minister (PM) Narendra Modi made high-profile visits to France, Greece, and Italy in the recent past. And, in a first by an Indian PM, he went to Austria, Poland, and Ukraine. Even as negotiations on a trade deal between Washington and New Delhi are underway, US vice-president J D Vance came to India and proposed a greater role for New Delhi in America's manufacturing economy. This month, India and the UK agreed on a trade deal. The trading community was particularly bullish since they had begun to get enquiries from Western companies for supplying goods. If US-China negotiations bear fruit and pave the way for lower tariffs, then it may have an impact on India's aspirations to integrate into international supply chains even as New Delhi seeks to close trade agreements with other partners. While developments along the western border have occupied much of the bandwidth of policymakers, New Delhi must not drop the ball on the art of the New Deal....