The re-election of Donald Trump as the President of the United States has once again thrown global geopolitics into flux. Known for his unorthodox approach to foreign policy and international trade, Trump’s return signals a potential reshaping of alliances and economic strategies across the world. At the heart of this unfolding drama is his aggressive tariff policy, which could have significant implications not just for the U.S.-China relationship, but also for India-China ties. President Trump has consistently pushed for a recalibration of the U.S. economy, with a central focus on reviving domestic manufacturing.

His core support base particularly in the so called “Rust Belt” states ~ feels the pinch of de-industrialization, and Trump believes that high tariffs on imports can incentivize companies to bring manufacturing back to American soil. In this vein, he has anno – unced sweeping tariffs across the board, sparing few countries. While a temporary 90-day delay has been granted to most, China has been hit hard with a 224 per cent tariff. Trump’s reasoning is simple but consequential: reduce America’s dependency on foreign goods and generate employment by rebuilding the domestic industrial base.

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However, the ripple effects of this decision are being felt across the world. With the U.S. and China once again locked in a tariff war, there is growing speculation about whether this renewed tension might inadvertently open doors for greater economic engagement between India and China. India and China share a complex relationship shaped by historical mistrust, border disputes, and strategic competition. The Galwan Valley clash in 2020 was a stark reminder of how volatile their bilateral ties can be. Yet, despite such tensions, trade between the two nations has not only persisted but thrived. China remains India’s largest trading partner, though the balance is heavily skewed in China’s favour. This economic relationship, however, is evolving.

Over the past decade, India has embarked on a journey to transform itself from a service-dominated economy to one with a stronger manufacturing base. Initiatives like “Make in India” are emblematic of this shift. India has made notable strides in mobile phone manufacturing, but it still lags behind in other critical sectors such as semiconductors, heavy machinery, and advanced electronics. Ironically, to achieve success in these sectors, India needs Chinese machinery and skilled labour ~ areas where China maintains a competitive edge. But Beijing is reluctant to let go of its manufacturing supremacy. Known as the “factory of the world,” Chi na is reportedly exercising export controls that restrict the flow of advanced machinery and technical manpower to India.

This tactic serves to preserve its own dominance in global manufacturing while slowing India’s industrial ascent. Despite these challenges, recent developments suggest a potential softening in IndiaChina ties, at least on the economic front. The two countries are beginning to see merit in cooperation, particularly in navigating the turbulent waters of global trade disrupted by Tru – mp’s protectionist policies. During a recent meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping in Kazan, both leaders emphasized the need to view each other’s development as an opportunity rather than a threat. This diplomatic overture was followed by encouraging signals from the new Chinese Ambassador to India, Xu Feihong.

He has expressed China’s desire for deeper economic collaboration, including increased imports of Indian goods and services into the Chinese market. At the same time, Ambassador Xu has called for a fair and transparent business environment for Chinese firms operating in India, specifically citing issues like visa delays and regulatory hurdles. While these statements are promising, China’s unpredictability on the geopolitical stage tempers any premature optimism. Beijing has a history of mixing economic engagement with strategic assertiveness, especially in its dealings with neighbours. Nevertheless, the very fact that economic cooperation is being discussed at high levels indicates that both sides are willing to keep communication channels open. Trump’s tariff war is, at its core, a high-stakes gamble.

On one hand, he claims he can strike a “great deal” with China, leveraging the massive tariffs as bargaining chips. On the other, if negotiations fail and the standoff persists, it may lead to a restructuring of global supply chains. In such a scenario, countries like India stand to benefit by attracting manufacturing investments diverted away from China. Yet, for India to truly seize this opportunity, it must overcome several internal hurdles. Infrastructure bottlenecks, inconsistent regulatory frameworks, and a need for skilled labour continue to hamper large-scale manufacturing. Additionally, geopolitical caution will likely prevent India from appearing too aligned with either the U.S. or China. A balanced app – roach is essential.

At present, India finds itself in a unique position. As an emerging power with strategic ties to both the U.S. and China, New Delhi must navigate these relationships carefully. Engaging positively with Washington allows India to deepen its defence and technological collaboration, while limited cooperation with China on trade and regional issues can prevent unnecessary escalation and foster mutual economic benefits. The global economic environment is rife with uncertainty. The U.S.-China trade war, escalating tariff regimes, shifting alliances, and internal political changes across major powers have created a volatile landscape. Against this backdrop, India must chart a pragmatic course ~ one that maximizes economic opportunity while safeguarding national security interests.

The Trump tariffs may not immediately reset India-China ties, but they do create an opening for greater dialogue and economic engagement. Whether this will lead to a lasting thaw or merely a tactical pause remains to be seen. What is clear, however, is that India must remain agile, diplomatic, and forward looking in its approach. As the dust settles over the current phase of global disruption, India’s best bet lies in maintaining a strategic equilibrium ~ strengthening partnerships with the U.S., exploring new avenues with China, and accelerating its own domestic economic transformation. The world is watching, and in this era of flux, India has the potential to emerge as a decisive player on the global economic stage.

(The writer is Associate Fellow, Manohar Parrikar Institute for Defense Studies & Analyses, New Delhi)