India and China Seek Reset Amid Trump’s Tariff Shock
Amid Trump’s tariff shock, India and China may find common ground. Modi’s visit to Beijing signals a potential reset in India-China economic relations, balancing rivalry with pragmatism.
Tariffs Hit India’s Exports
India’s Prime Minister Narendra Modi arrived in China this week carrying the weight of fresh U.S. tariffs. Since Wednesday, Washington has imposed a 50% levy on key Indian exports such as diamonds and prawns. President Donald Trump framed the move as punishment for India’s continued purchase of Russian oil. Against this backdrop, India-China economic relations are once again in the spotlight.
For India, the impact could be significant. Experts warn that the higher tariffs may damage the country’s vibrant export sector and slow its ambitious growth trajectory.
China Faces Its Own Economic Strain
China’s President Xi Jinping is also grappling with pressure. His push to revive a slowing economy has run into the barrier of U.S. trade restrictions. Together, these challenges have created a rare moment of alignment between India and China, two nations often divided by rivalry.
Modi’s visit suggests both sides are exploring whether stronger India-China economic relations could offer resilience in a world increasingly shaped by protectionism.
Why This Relationship Matters Globally
Analysts stress that the outcome of Modi’s trip will extend beyond Asia. “Put simply, what happens in this relationship matters to the rest of the world,” wrote Chietigj Bajpaee and Yu Jie of Chatham House.
India’s economy, already valued at $4 trillion, is on track to become the world’s third-largest by 2028. Meanwhile, China remains the world’s second-largest economy. Greater cooperation between these two powerhouses could reshape global trade flows and alter the balance of economic power.
Lingering Tensions Remain
However, deep challenges persist. The two countries share a long-standing border dispute that has often erupted into violence, most notably in Ladakh’s Galwan Valley in 2020. The fallout disrupted investments, stalled infrastructure projects, and prompted India to ban more than 200 Chinese apps, including TikTok.
Other fault lines include Tibet, the Dalai Lama, and disputes over water resources. China’s plan to build the world’s largest hydroelectric project on a shared river has raised alarms in Delhi. Additionally, Beijing’s close ties with Pakistan remain a source of mistrust.
Economic Pragmatism Pushes Cooperation
Despite tensions, economics may push both countries closer. India continues to depend on China for critical raw materials and components. Meanwhile, Beijing seeks access to India’s vast consumer market as U.S. demand shrinks and Southeast Asian markets become saturated.
Easier visa approvals, lower import duties, and renewed direct flights are seen as possible short-term wins. Modi’s government may also push for greater support in electronics manufacturing, pitching India as a hub alongside Vietnam.
The SCO Factor and Multipolar Ambitions
Modi’s visit is tied to the Shanghai Cooperation Organisation (SCO), a regional body that includes China, India, Russia, Pakistan, and Iran. While India has previously downplayed the SCO’s importance, strained ties with Washington have revived Delhi’s interest.
The optics matter for Beijing too. Trump’s tariff war has fueled China’s desire to showcase Global South solidarity. For both leaders, emphasizing multipolarity is a way to reduce dependence on the United States and position themselves as central players in global trade.
What Lies Ahead for India-China Economic Relations
While no dramatic breakthroughs are expected, Modi’s visit could lay the groundwork for incremental gains. Relaxed visa rules, resumed flights, and new trade deals may emerge as soft wins. Yet experts caution that building trust will take time.
Still, the symbolism of Modi and Xi meeting at this moment sends a strong message to Washington: India has options, and its future will not be dictated by a single partnership.
