Can India replace China in U.S. electronics trade? A shock model analysis of computer, electronic, and optical equipment sector (HS-26)

The trade dynamics among the United States, China, and India have become increasingly complex and strategically significant within the global economy, particularly amid intensifying U.S.-China trade tensions. This study employs the Leontief Input-Output model (1936), implemented through the shock simulation framework developed by Dehghani (2023), to assess India’s potential to substitute China in U.S. trade relations, focusing on the computer, electronic, and optical equipment sector (HS-26). Three shock scenarios, categorized as low (10–30%), medium (40–60%), and high (70–100%), are simulated to reveal patterns of economic interdependence among the three economies. The results reveal that India cannot fully substitute China in HS-26; however, it could achieve replacement in HS-26 by strongly focusing on IT and other information services sector (HS-62T63), which is closely linked to HS-26. While India’s growing presence in global electronics is notable, the United States should pursue a broader diversification strategy, engaging partners such as Mexico, Taiwan, and South Korea alongside India to mitigate trade shocks and enhance supply chain resilience.