'US-China trade deal won't last for long': Sanjeev Sanyal says India must focus on its own strengths, not China+1

Even as Washington and Beijing announce a breakthrough trade deal, Sanjeev Sanyal, a Member of the Prime Minister's Economic Advisory Council, has cautioned that the agreement is unlikely to be durable.

Speaking to Mint on whether the US-China deal would affect India's China+1 strategy, Sanyal said: "I can't predict how that deal will be. We'll have to adjust to whatever it is. But I think that completely misses the point of what's going on. This is a shift in global power dynamics which both China and the US understand. So no matter what that trade deal is - it is naturally unstable."

Sanyal dismissed the idea that trade alone could resolve underlying tensions between the two global powers. "So my view is that we should continue to build our strengths irrespective of what that China-US trade deal is. It will not last for long periods of time if it is something specific. If it is something general that's a different matter." 

The economist said that this is a long-term struggle of great powers and that is not going to go away with a trade deal. "Ultimately, it's a civilizational, geostrategic issue in which trade is one small part of it. We should not think of ourselves as China plus one. We should think of ourselves as one in our own right."

His comments come just days after US President Donald Trump announced a trade deal with China. The agreement includes China lifting export restrictions on rare earth minerals and magnets, while the US allows continued access for Chinese students to American universities. Trump, in a post on Truth Social, said: “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT!”

Despite the upbeat statements, US Commerce Secretary Howard Lutnick acknowledged that the agreement merely puts "meat on the bones" of a fragile Geneva deal, which had faltered over China's curbs on critical minerals exports. The Trump administration had responded by imposing export restrictions on semiconductor software and aircraft technologies.

Meanwhile, India is moving forward with its own early trade agreement with the US, expected before the current 90-day pause on reciprocal tariffs ends on July 9. "We are working on an early trade deal with the US. The progress has been good. We are hopeful that this will be done within the timeline," Commerce Secretary Sunil Barthwal said.

Chief negotiator Rajesh Agarwal confirmed that the US team visited India from June 5 to 11, and the goal remains to finalise the first tranche of the broader trade deal by fall 2025. Officials noted that both sides will need to reduce tariffs and address non-tariff barriers to reach their target of doubling bilateral trade to $500 billion by 2050.