By Annunthra Rangan
“If war is what the US wants, be it a tariff war, a trade war, or any other type of war, we’re ready to fight till the end.”
—China
Tensions between China and the United States have intensified following Washington’s decision to double tariffs on Chinese imports to 20 percent. In response, Beijing is seeking to strengthen ties with New Delhi, urging greater cooperation to jointly oppose “hegemonism and power politics”.
China’s Outreach To India
Chinese Foreign Minister Wang Yi, addressing the National People’s Congress, described India and China as “each other’s largest neighbours” and stressed the importance of mutual cooperation.
“A cooperative pas de deux of the dragon and the elephant is the only right choice for both sides,” Wang stated, emphasizing that closer ties would bolster democracy in global governance and strengthen the Global South.
Wang pointed out that 2025 marks 75 years of diplomatic ties between the two nations, expressing China’s willingness to “sum up past experience, forge a path forward, and advance China-India relations on a track of sound and stable development.”
He cited positive developments such as recent military disengagement in Ladakh’s Depsang and Demchok regions, along with increased diplomatic exchanges.
Wang also referenced the October 2024 BRICS Summit meeting in Kazan, Russia, where Chinese President Xi Jinping and Prime Minister Narendra Modi held strategic discussions to improve relations.
While India has yet to officially respond, External Affairs Minister S Jaishankar recently reaffirmed New Delhi’s commitment to fostering a “more predictable and positive” relationship with Beijing. Potential steps include resuming pilgrimages to sites under Chinese control, reinstating direct flights, and enhancing media exchanges.
Border Disputes On The Backburner
On the long-standing India-China border dispute, Wang stressed that territorial differences should not overshadow broader relations. He called for a pragmatic approach, advocating that disputes be managed without derailing diplomatic and economic cooperation.
The US-China Trade War Intensifies
Since returning to office in January, President Donald Trump has intensified his trade war with China. Following concerns about illegal immigration and fentanyl trafficking, Washington first imposed a 10 percent tariff on Chinese imports in February—later doubling it to 20 percent. Beijing swiftly condemned the move as an attack on the global trade system and announced countermeasures. “We will impose tariffs of 10-15 percent on key US agricultural products, including chicken, wheat, corn, and cotton,” China’s finance ministry declared.
While analysts suggest China’s response strategically targets Trump’s voter base, Beijing’s actions remain measured enough to allow room for negotiation. Despite recording impressive export growth last year, China’s economic outlook has dimmed. Official data shows exports increased by just 2.3 per cent year-on-year in early 2025, a sharp drop from December’s 10.7 percent growth. Weak consumer spending, property debt crises, and youth unemployment continue to burden the Chinese economy.
“As exports face downside risks, fiscal policy will need to be more proactive,” warned Zhiwei Zhang, president of Pinpoint Asset Management.
The India Factor
The ripple effect of US-China trade tensions is already being felt in India. Following Trump’s latest tariff announcement, Indian stock markets shed nearly $180 billion in value within two days.
India, previously impacted by the 2018 trade war, faces renewed concerns. The US had earlier imposed tariffs on Indian steel and aluminium exports worth $1.1 billion and revoked India’s preferential trade benefits under the Generalized System of Preferences (GSP) in 2019.
Sectoral Impact On India
- Pharmaceuticals: With 70 percent of India’s active pharmaceutical ingredients (APIs) imported from China, supply chain disruptions could raise drug prices domestically and hurt export competitiveness.
- Automotive: India’s vehicle manufacturing sector, heavily reliant on Chinese parts, may see production delays and rising costs.
- Metals: The previous trade war severely impacted global demand for commodities like steel and aluminium. Indian producers could face renewed pressure. However, some industries may find opportunity amid the chaos:
- IT Services: As US firms reduce reliance on Chinese tech, India’s IT sector could attract new business.
- Agriculture: India previously expanded soybean exports to China when Beijing reduced imports from US farmers. Similar opportunities may arise again.
Economic Ripples And Uncertainty
During the earlier trade war, foreign investors withdrew approximately Rs 33,000 crore from Indian markets, triggering volatility. The Indian rupee depreciated by 9.5 percent between 2018 and 2020, making imports costlier, but boosting export competitiveness.
“India’s agricultural exports to the US are unlikely to face major disruption unless Washington imposes sweeping tariffs,” said Jayant Dasgupta, former Indian Ambassador to the WTO.
Trump’s Tariff Strategy And Its Fallout
Tariffs have become a cornerstone of Trump’s economic policy. While intended to improve American market access, they are raising prices for US consumers and straining global supply chains.
During his earlier term, tariffs initially boosted US manufacturing, but by 2019, job losses and an industrial downturn followed. With fresh tariffs now in place, the US agricultural sector—particularly Trump’s voter base—faces mounting challenges as China and other trading partners retaliate.
Navigating The Power Struggle
As Washington and Beijing lock horns, New Delhi faces a strategic balancing act. Strengthening ties with Beijing may provide economic opportunities, but India must also safeguard its relationship with the US, a key trade and strategic partner. “India’s ability to navigate this complex economic landscape will be critical,” said an industry expert.
With Beijing reaching out and Washington doubling down, India’s diplomatic finesse may determine whether it emerges stronger or vulnerable amid this escalating global confrontation.
—The writer is a Senior Research Officer at Chennai Centre for China Studies. Her research interests constitute China-WANA (West Asia and North Africa) relations and human rights