India-China diplomatic thaw driven by U.S. tariffs, but deep fault lines remain
The Trump administration has imposed an additional 25% tariff on Indian goods effective August 27, 2025, citing India’s continued imports of Russian oil. The move doubles tariffs on most Indian exports to the U.S. to 50%, with only pharmaceuticals and electronics exempt. Washington accuses New Delhi of financing Russia’s war in Ukraine, as Russian oil makes up 36% of India’s crude imports.
Facing economic strain, India has cautiously moved closer to China. Recent engagements include agreements to ease visa restrictions, reopen border trade routes, and cooperate on supply of key materials. Prime Minister Narendra Modi’s participation in the Shanghai Cooperation Organization summit in Tianjin marked his first visit to China in seven years, with both leaders stressing peace along the disputed border. Beijing has also lifted export curbs on fertilisers, rare earths, and machinery, offering India short-term relief, News.Az reports, citing foreign media.
Yet obstacles persist. India’s trade deficit with China reached nearly $100 billion in 2024–25, raising concerns over cheap Chinese imports flooding Indian markets. Territorial disputes along the Line of Actual Control remain unresolved despite multiple rounds of talks and troop disengagement agreements. Military tensions continue, particularly after the 2020 Galwan clash and China’s alleged intelligence support to Pakistan during India’s 2025 Operation Sindoor.
Strategically, India remains wary of Beijing’s growing influence in South Asia and its close ties with Pakistan. While India is diversifying partnerships with Japan, South Korea, and mineral-rich countries for rare earths, it is also strengthening security ties in Southeast Asia to counter China’s regional ambitions.
Analysts note that India’s power elites and middle class traditionally lean toward closer ties with the West, especially the U.S., over China. The current India-China thaw appears tactical—an attempt to weather tariff pressures—rather than a genuine long-term shift.
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