IPEF Losing Relevance Under Trump's Aggressive Trade Strategy: GTRI

The Indo-Pacific Economic Framework for Prosperity (IPEF), a 14-member grouping including India, the US and Australia, is losing relevance under US President Donald Trump's aggressive trade strategy, think tank GTRI said on Tuesday.

The IPEF was launched jointly by the US and other Indo-Pacific partner countries on May 23, 2023, in Tokyo. The 14 partners represent 40% of global GDP and 28% of global goods and services trade.

IPEF is structured as a plurilateral cooperation framework built around four pillars -- Trade (Pillar-I), which seeks to develop rules on digital trade, labour, environment, and regulatory practices; and Supply Chains (Pillar-II), which focuses on resilience, diversification, and crisis response.

Clean Economy (Pillar-III), which promotes cooperation on clean energy, climate technologies, and sustainable infrastructure; and Fair Economy (Pillar-IV), which addresses anti-corruption, tax transparency, and governance.

The Supply Chain Resilience Agreement was signed in November 2023 and came into force on February 24, 2024, while the Clean Economy, Fair Economy, and Overarching Agreements were signed in September 2024 and entered into force in October 2024.

India has joined three of the four pillars -- supply chains, clean economy, and fair economy -- while staying out of the trade pillar due to concerns over commitments in areas like digital trade and regulations.

The Global Trade Research Initiative (GTRI) said in a US trade environment under Donald Trump, the IPEF has "little practical role in the near term".

Trump's approach -- centred on high tariffs, aggressive use of Section 301 investigations, and quick bilateral deals -- stands in sharp contrast to IPEF's cooperative, non-binding structure, it said.

GTRI Founder Ajay Srivastava said the IPEF is losing relevance under Trump's aggressive trade strategy.

He also said that the ambition to shift supply chains away from China faces structural limits.

The Supply Chain Resilience Agreement focuses on making supply chains more reliable and less dependent on a few countries.

It encourages member countries to diversify sourcing, identify critical sectors like semiconductors, pharmaceuticals, and critical minerals, map supply chain risks, and share real-time information on disruptions.

To operationalise this, it has set up institutional bodies such as the Supply Chain Council (SCC), Crisis Response Network (CRN), and Labour Rights Advisory Board (LRAB). India has taken an active role as Vice-Chair of the SCC.

While some Tier I manufacturing, such as electronics assembly, has begun moving to countries like India and Vietnam, deeper supply chain layers remain heavily dependent on China, he added.

Its dominance in Tier II components and Tier III raw materials, including critical minerals and industrial inputs, reflects decades of ecosystem development that cannot be easily replicated.

"As a result, companies are pursuing 'China+1' strategies, diversifying risk rather than exiting China altogether," he said.

While IPEF creates an opportunity for India to position itself as an alternative manufacturing hub, actual benefits will depend less on IPEF itself and more on India's ability to undertake domestic reforms, improve infrastructure, and strengthen industrial competitiveness, he said.