Some companies based in China, struggling with heavy US tariffs, are now turning to Indian exporters to help fulfill orders and maintain their American clientele as the ongoing trade war continues to disrupt global trade flows. At the Canton Fair — the worlds largest trade fair, ongoing in Guangzhou until May 5 — several Indian exporters reported being approached by Chinese firms, according to Ajay Sahai, Director General of the Federation of Indian Export Organizations. These Chinese companies are seeking Indian partners to supply goods to US customers, with the Indian firms agreeing to pay commissions to their Chinese counterparts, Sahai said in an interview.

Currently, most Chinese goods sent to the US face tariffs as high as 145%. Meanwhile, Indian exports to the US are subject to a much lower 10% tax, though this could rise to 26% in July if US President Donald Trump implements further reciprocal tariffs after a 90-day pause. In Trump’s earlier term, many Chinese exporters shifted production to Southeast Asian countries like Vietnam and Thailand to bypass tariffs. However, with the US now imposing reciprocal tariffs of around 46% on countries like Vietnam, India may become a more attractive alternative for redirected orders.

Unlike Southeast Asia, India has strict controls on Chinese investment, making it challenging for Chinese firms to set up operations there or re-export through India. Instead, Chinese companies at the fair proposed that Indian exporters supply goods either under the Chinese firms brand names or through co-branding arrangements, Sahai explained.

Most of the inquiries came from sectors such as hand tools, electronics, and home appliances. Sahai added that there is hope US customers may eventually deal directly with Indian suppliers. The commission structure between Indian suppliers and Chinese firms would be decided through mutual agreement. OayKay Tools, a Jalandhar-based hand tools manufacturer specializing in items like drop forge hammers and cold stamp machines, is among the Indian firms currently in talks with Chinese and China-based American companies to supply goods for the US market.

“Weve been approached by four to five companies,” said Siddhant Aggarwal, export officer at OayKay Tools. “They need to keep their brands alive and must continue serving their customers.” This uptick in export interest coincides with progress in trade negotiations between India and the US. Indian officials are optimistic about securing a trade deal that could help exempt Indian goods from future US tariffs. During a recent visit to India, US Vice President JD Vance emphasized the growing collaboration between the two nations, highlighting plans to finalize a bilateral trade agreement by the fall.

Meanwhile, US-China relations over tariffs remain tense. China has called the tariffs meaningless, while Trump claimed negotiations were ongoing, despite Beijings insistence that talks would only resume if the US dropped unilateral tariffs. It remains unclear to what extent the US will allow Indian firms to fill the market gap left by Chinese exporters while maintaining economic pressure on Beijing.

At the Canton Fair, American participation was relatively low, but concerns over tariffs dominated discussions. Some Chinese firms are also increasing investments in Southeast Asia to avoid US tariffs during Trump’s 90-day tariff reprieve. Victor Forgings, another Jalandhar-based hand tools maker producing pliers, hacksaws, and hammers since 1954, is also witnessing new business opportunities amid the trade tension.

“We’ve not only received inquiries from Chinese suppliers wanting us to fulfill US orders but also from American companies operating in China who are now unable to ship due to the high tariffs,” said Ashwani Kumar, managing partner at Victor Forgings. Kumar noted that they are planning to expand by building two new manufacturing plants to meet the growing demand. He also mentioned that American companies are willing to share technical expertise with Indian firms to strengthen their supply capabilities in India.

Disclaimer: This image is taken from Bloomberg.