Reeling from Trump's tariffs, India and China seek a business reboot

Indian Prime Minister Narendra Modi arrived in China this week, facing new challenges after the United States raised tariffs on Indian exports like diamonds and prawns to 50 percent. President Donald Trump said these tariffs are a punishment for India’s continued purchase of Russian oil. Experts warn that these high tariffs could seriously damage India’s export sector and slow down its economic growth. China is also struggling with its own economic problems, as the US has imposed high tariffs on Chinese goods, making it harder for China to achieve its economic goals. With both countries feeling the pressure from the US, Modi and Chinese President Xi Jinping may be looking for a fresh start in their relationship, which has often been tense due to border disputes and other issues.

India and China are two of the world’s largest economies, with China ranked second and India fifth. India’s economy is growing quickly, and it is expected to become the third largest by 2028. Some experts believe that the world should pay more attention to how India and China can work together, rather than just focusing on the relationship between the US and China. However, there are many obstacles to closer cooperation. The two countries have a long-standing border dispute, and violence broke out in Ladakh’s Galwan Valley in 2020, marking the worst conflict between them in over forty years. This led to economic consequences, such as the suspension of direct flights, delays in visas and investments, and India banning over 200 Chinese apps, including TikTok.

There are other sources of tension as well, such as disagreements over Tibet, the Dalai Lama, and water rights related to China’s plans to build a massive hydroelectric project on a river shared by both nations. China also has strong trade relationships with many of India’s neighbors, while India’s relations with its neighbors are not as good. Modi’s visit to China is for the Shanghai Co-operation Organisation (SCO) summit, which includes China, India, Iran, Pakistan, and Russia. India has not always valued the SCO highly, but with its relationship with the US worsening, India is now looking for new alliances. China, meanwhile, wants to show solidarity with other developing countries as it faces US tariffs. Both India and China rely on each other for trade, especially in manufacturing and electronics. Experts say that if they can work together, they could reduce their dependence on the US and reshape global trade. However, their relationship is complicated, and it will take time to build trust and cooperation. Modi’s visit could help repair some of the damage and send a message to the US that India has other options.