WSJ What’s News - India Sees a Golden Opportunity in U.S.-China Trade War

Episode Date: April 22, 2025

A.M. Edition for April 22. The U.S. and India agree to broad terms to negotiate a potential trade deal. WSJ’s South Asia bureau chief Tripti Lahiri says India, a country that has long frustrated foreign companies with red tape, now sees an opening to capture American investment from China. Meanwhile, Washington targets Chinese solar-product manufacturers in Southeast Asia with steep tariffs. And Harvard sues the Trump administration in an escalating battle over its funding. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Harvard sues the Trump administration, setting up a legal fight over the president's campaign to reorder elite higher education. Plus Washington slaps heavy tariffs on solar imports from Southeast Asia. And why the escalating U.S. trade war with China is a golden opportunity for India. It isn't just that U.S. tariffs are giving India an opportunity with China, but they're giving India an opportunity with those economies that had taken some of the China manufacturing in recent years, basically since Trump 1.0. It's Tuesday, April 22nd.

I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Harvard is suing the Trump administration, arguing that the government violated the university's constitutional rights by freezing billions of dollars in federal funding and jeopardizing its academic independence. The suit asks a federal court to halt the funding freeze and declare the move, as well as demands made of the university, by President Trump's anti-Semitism task force as illegal. Those demands include federal government oversight of admissions, hiring, and the ideology of students and staff, which Harvard says go against the First Amendment.

The task force, which in recent weeks has shaken up several top American universities, says it's targeting schools that failed to protect Jewish students during pro-Palestinian protests last year. A White House spokesman responded to Harvard's suit, saying the university had failed to meet the basic conditions of accessing taxpayer funding. Elsewhere in higher ed news, the Education Department says it will start collecting on defaulted federal student loans for the first time since 2020 when collections were put on pause due to the pandemic. According to the department, borrowers in default will receive an email asking

them to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. President Trump is vowing to stick by Defense Secretary Pete Hegseth in spite of new revelations that the Pentagon chief used his personal phone to place sensitive military information into a signal chat featuring his wife, personal lawyer, and others. Speaking at the White House Easter egg roll yesterday, Trump said that Hegseth was doing a great job, while Hegseth blamed former staffers he fired over alleged leaks of information for running to reporters.

See, this is what the media does. They take anonymous sources from disgruntled former employees, and then they try to slash and burn people and ruin their reputations. Not going to work with me." According to U.S. officials, Trump is unlikely to fire Hexeth at least anytime soon, given the political capital he spent to get him confirmed. Dismissing him could also raise questions about why he held on to national security

adviser Mike Walz after he added a reporter to a separate signal chat about military plans. The US is dialing up its trade dispute with China, targeting the regional supply chains of some of its leading solar panel manufacturers with triple and even quadruple-digit tariffs. I asked Journal Energy Transition reporter Ed Ballard what effect the new levies on imported solar cells from Cambodia, Thailand, Vietnam and Malaysia could have on the global renewables market. So these are some pretty punchy headline numbers and no one is going to be paying a tariff

rate of three and a half thousand percent, which is the rate that was imposed on some solar cells from Cambodia. At the low end, it's about 41 percent, which might be more manageable. Let's take a step back. These are four countries where Chinese companies that dominate the solar industry have set up factories in recent years precisely to get around U.S. restrictions on imports. Now, to get ahead of this latest round of tariffs, they have been setting up factories in new places such as Laos and Indonesia, which aren't covered by these new tariffs. So if you're a solar manufacturer, you've had some time to set up new sourcing relationships and find new factories to supply the solar cells you need.

And of course, that raises the possibility that this game of whack-a-mole will just continue and we'll see a continuing race between domestic solar manufacturers complaining about low-cost competitors and the Chinese companies looking for new places to produce solar cells that will eventually find their way into the U.S. market. Ed, is that the only outlook for American industry here? I see that one U.S. coalition, the American Alliance for Solar Manufacturing Trade Committee, came out and called this tariff action a decisive victory for US manufacturers.

Well, this is where you get into the weeds a little bit. So these tariffs are imposed on solar cells. They're building blocks for solar panels. And basically, the US is a long, long way from being self-sufficient in that equipment. When it comes to the next level up, assembling those solar cells into what are called solar modules, which are like the solar panels that sit on your roof. The US has a lot of that capacity. So if you're a company, some of them are Chinese, that are making solar modules in America, you'll say, well, look, I'm here, I'm boosting American manufacturing, but I can't get the stuff I need in the United States. I need to get it from somewhere. And you're going to move to another part of Southeast Asia and at the same time, these tariffs also create more of an incentive for the U.S. to move up that manufacturing

chain and stop building the solar cells in the U.S. as well. But that just takes a long time. That was the Journal's Ed Ballard. And in market action today, U.S. stock futures are pointing to a higher open following yesterday's rout, which was spurred by trade anxiety and concerns over President Trump's attacks on Fed Chair Jerome Powell. A wave of big industrial earnings is due this morning, including from Lockheed Martin, while Tesla's results are due after the market close.

And the IMF will release its World Economic Outlook at 9am Eastern, a window into its view on the global economy and inflation amid Trump's tariffs. Coming up, the US and India agree to talk trade. We'll catch up with our editor in New Delhi about what could be on the table after the break. If only life had a remote control. You could pause or rewind.

Well, life doesn't always give you time to change the outcome, but pre-diabetes does. Take the one-minute risk test today at DoIHavePrediabetes.org, brought to you by the Ad Council and its pre-diabetes awareness partners. The U.S. and India have agreed to broad terms of negotiation for a potential bilateral trade deal. That news followed a meeting between Vice President J.D. Vance and Indian Prime Minister Narendra Modi, and we report that the talks will likely be broader in scope than the deals the US is seeking with dozens of countries before a pause on reciprocal tariffs ends in July.

Tripty Lahiri is the Journal's South Asia bureau chief. Tripty, I know that when Prime Minister Modi visited Washington in February, he offered to expand bilateral trade substantially. Decode that for us in the context of these talks. Tripti Lahiri Some of the things that seem to be in consideration are things like energy. India already used to be buying quite a lot of US oil. That kind of went down when it started buying more Russian oil.

So that could go up more LNG, more defense, and probably cars. There's been a dance for a long time between India and Tesla, with India saying, we really want you to set up a factory here. Tesla saying, we really want to sell there, but the duties are really high. Maybe we see those duties come down, but maybe Tesla doesn't really straightaway set up any kind of factory. So those are sorts of things that people are looking at as things that are really be discussed very seriously. Nat. That mention of the high duties that Tesla had been complaining about, that's

a good segue to some reporting that you had for us earlier this month, noting India's long history with tariffs, part of a protectionist strategy that it first pursued after independence from Britain. How does that factor into how the government may be looking at this current moment? Yeah, I mean, in many ways, India has come a long way from where it used to be in the first decades of its independence. It had the strategy of import substitution. So the idea was that really keep everything out to the extent possible and try to get

things made at home. But the issue was it didn't really work out great. There were a lot of substandard products, things were really expensive. And the companies weren't competing in the global markets for exports. And then in 1991, the Soviet Union was collapsing. And that was India's biggest trade partner. And India went through this financial crisis and was forced to open up. And India's then finance minister said, actually, this is an opportunity for us.

We really shouldn't have been doing this. And this is really going to be very good for the country. And actually, India grew a lot since then. So tariffs went down almost as low as 12%. But then in the last decade have kind of gone up again and average tariffs are, the US says, around 17%. You mentioned the 90s were seen as an opportunity for India to pivot away from the USSR, but that now some see this as a golden opportunity.

How so? So yeah, people here are looking at it a couple of different ways. On the one hand, they feel that having more trade, having a stronger economic relationship would bolster a sort of security and foreign policy partnership that has grown a lot over the past decade. And in many ways, people have said, even Indian officials, but definitely economists and trade experts, that the heft of the US-Indian economic relationship

doesn't quite match the sort of promise that there is or the political partnership that there is. And over the last decade, the government has really tried to put in place incentives for boosting manufacturing. It's been kind of a mixed record for some kinds of industries where we've seen actually a lot of apparel export. Business has gone from China to Vietnam and to Bangladesh, but not necessarily to India. But India has made great strides in smartphone assembly and really believes that now it can also go to the next tier of some of the components and other parts of the value chain. And here, if you have these double-digit tariffs on a whole range

of Chinese goods, that India kind of feels like it's going to be much cheaper to buy from us. It isn't just that the US tariffs are giving India an opportunity with China, but they're giving India an opportunity with those economies that had taken some of the China manufacturing in recent years, basically since Trump 1.0 when there was the first set of the tariffs. Okay, so maybe an opportunity here for India to siphon away business from China, but maybe also from other regional economies, many of which are targeted with much higher reciprocal tariff rates than India. Yeah, that's definitely true.

What we've seen in the last few years is that a lot of manufacturing went to Southeast Asian countries like Vietnam, and it seemed like maybe India didn't take as much of that manufacturing from China as it could have. And here's kind of a chance for like a reset, a second opportunity to get some of that manufacturing if it can really signal that we're really ready to make things really very attractive for businesses to be here now. And certainly Trump is helping with that as well. TRIPTI LAHIRI is The Wall Street Journal's South Asia Bureau Chief.

Trypte, thank you so much for the update. Thank you so much for having me. And that's it for What's News for this Tuesday morning. Today's show was produced by Daniel Bach and Kate Bullivant. Our supervising producer was Christina Rocca. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.