India between giants: Navigating Trump’s trade war and China’s outreach

By Dr. Manoj Kumar Mishra*

The diminishing perception of China as a strategic threat and the growing bonhomie between the United States and China under the current Trump administration is evident in its casual approach to technology transfers, a lackluster Indo-Pacific strategy, and its undermining of international norms and institutions, including the United Nations. These shifts have enabled China to occupy a strategically advantageous position in the global order.

While previous administrations, including Trump’s first term, prioritized China as a primary security concern, the current administration appears more focused on profit-making, even at the expense of national security. In August, it brokered a revenue-sharing agreement with Nvidia, allowing the company to sell its H20 semiconductor chip to China. In return for granting export control licenses, the government receives 15 percent of the revenue from these sales. Similarly, a deal was struck with AMD to share 15 percent of its revenue from selling MI308 processors to China. These moves suggest a willingness to trade away security concerns for financial gain, in stark contrast to earlier warnings about companies like Huawei and TikTok potentially compromising American data.

The Trump administration’s trade policies have inadvertently pushed India closer to China, despite India’s reluctance to support a world order that diminishes the role of the United States. Following the 2020 Galwan Valley clash, India and China have made efforts to stabilize their border and build mutual confidence. However, the administration’s imposition of tariffs on India and its diplomatic overtures to Pakistan, coupled with a softer stance on China, have altered India’s strategic calculus. As a result, India has deepened its engagement with China as a hedge against the unpredictability of the Trump administration.

Since the imposition of tariffs, India and China have increased diplomatic exchanges. Chinese Foreign Minister Wang Yi visited New Delhi in August, and India reciprocated by sending its defense, external affairs, and national security officials to China in support of Beijing’s presidency of the Shanghai Cooperation Organisation. Despite lingering tensions, both countries have agreed to resume direct flights, facilitate civil society exchanges, and restore access to religious pilgrimages such as Kailash Mansarovar.

Indian business groups advocating stronger trade and investment ties with China have gained influence, although trust deficits and a rising trade imbalance limit the feasibility of seamless economic integration. India has clarified its stance on Taiwan, refused to accept Chinese claims over the South China Sea, and conducted joint naval exercises with the Philippines. Despite warming ties, both nations have yet to withdraw troops to pre-2020 positions.

Security concerns over data theft have led India to exclude Chinese firms from its 5G network and ban apps like TikTok. Nonetheless, the improving bilateral climate may encourage Chinese investment in joint ventures, allowing Indian firms to benefit from technical collaboration. Yet, cooperation in technology remains uncertain, as China has restricted exports of rare-earth magnets, fertilizers, tunnel-boring machines, and technical personnel to India in 2024 and 2025.

China’s covert support to Pakistan during its military standoff with India in May, including real-time intelligence sharing, continues to cast doubt on the depth of India-China relations. India has not revived trilateral meetings with China and Russia since 2019, and Prime Minister Modi did not attend President Xi Jinping’s victory parade in Beijing. Instead, External Affairs Minister S. Jaishankar represented India at Brazil’s emergency BRICS summit, while Xi and Putin participated directly.

China seeks India’s endorsement of its One China Policy and Belt and Road Initiative, but India remains reluctant due to unresolved border issues and longstanding China-Pakistan ties. If the Trump administration persists in alienating India over trade, investment, and migration, India may be compelled to compromise with China to counterbalance the US. Such a shift could undermine the American Indo-Pacific strategy and elevate China as the dominant power in the region. Modi still sees potential for improved US-India relations, as reflected in his public support for Trump’s Gaza Peace Plan. The Indo-Pacific framework suggests stronger shared interests between India and the US than between India and China. If this understanding fails to resonate with Washington, India’s strategic calculations may unravel.

On the global stage, while the Trump administration imposed heavy tariffs on Brazil and India, Xi Jinping addressed the BRICS summit on resisting protectionism and extended a welcome to Modi. China announced tariff cuts on African goods in June, contrasting with the economic coercion faced by many developing nations under US policy. The Trump administration’s AI strategy, titled “Winning the Race,” reflects nationalist ambitions, whereas China’s “Global Solidarity in the AI Era” conference signals its intent to share technological benefits globally. Similarly, while the Trump administration has dismissed climate change and criticized the UN, China has taken steps to reduce carbon emissions and strengthen the UN through its Global Governance Initiative.

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*Senior Lecturer in Political Science, SVM Autonomous College, Jagatsinghpur, Odisha

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