In the wake of the US imposing 50 per cent tariffs on Indian goods, the growing bonhomie between India and China has caught global attention. Prime Minister Narendra Modi attended the Shanghai Cooperation Organisation (SCO) summit in Tianjin, China.
It was the Prime Minister’s first visit to China in seven years, notably at a time when trade relations between India and the US have soured due to President Donald Trump’s aggressive tariff policies.
However, some experts believe the growing India-China bonhomie could be a tactical move and may not be enough to nullify the impact of the 50 per cent US tariffs on India.
“The growing bonhomie between India and China seems to be a short-term tactical move. The two nations share a history of strained relations and unresolved border disputes, along with differences over the Belt and Road Initiative, which remain key obstacles to long-term cooperation,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
It is too early to have lofty expectations from the renewed warmth between the two countries. Experts also point to India’s widening trade deficit with China, which weakens New Delhi’s bargaining power.
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“India’s merchandise trade deficit with China has widened to almost $100 billion, driven by heavy import dependence on electronics, telecom equipment, pharmaceutical APIs, solar modules, and capital goods. India primarily exports lower-value goods while importing high-value finished products, combined with supply chain lock-ins created by China’s scale, low costs, and reliability,” Manoranjan Sharma, Chief Economist at Infomerics Valuation and Ratings, pointed out.
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“Such an economically weighty and strategically sensitive relationship exposes India to supply shocks, weakens its bargaining power, and undermines initiatives like Atmanirbhar Bharat and Make in India. The challenge is compounded by geopolitical rivalry and security risks linked to dependence in sensitive sectors, such as telecom (Huawei, ZTE), power equipment, solar energy, and dual-use technologies with both civilian and military implications,” Sharma said.
Another factor that cannot be overlooked is India’s strong tilt towards China, which could further strain India-US relations and lead to strategic and geopolitical fallout.
“Such a shift could weaken India’s technology and investment ties with the US, as well as shared strategic goals and diversification opportunities. In the long run, India’s more sustainable path lies in deepening integration with the US, EU, Japan, and other democratic partners, even if it entails short-term costs,” Sharma said.
Trump’s tariff policy could change after negotiations. Experts say India needs to tread carefully and ensure that its actions do not further strain relations with the world’s largest economy, which is also the largest export partner for India.
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The US claims 18 per cent of India’s total exports, accounting for about 2.3 per cent of the country’s GDP. Growing commerce with China can cushion the US tariff blow, but cannot offset the entire impact.
“India is unlikely to counterbalance the impact of the 50 per cent US tariffs through trade with China in the near term. While expanding commerce with China could help cushion the blow, it cannot fully offset the immediate tariff shock,” said Sharma.
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However, a better India–China relationship may help New Delhi secure critical industrial raw materials and infrastructure supplies. Renewable energy, aviation, pharma, manufacturing, and tourism are the sectors where India can benefit from its improved ties with China.
Experts expect the 25 per cent secondary US tariffs on India to end soon as negotiations progress. There is also growing political and legal pressure on the Trump administration in the US.
It remains to be seen how the issue unfolds in the Supreme Court, but a US appeals court ruled on Friday that most of Trump’s tariffs are illegal.
However, the court allowed the tariffs to remain in place until October 14 to give the administration time to file an appeal with the US Supreme Court.
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