August 20, 2025

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Trump’s Tariffs Push New Delhi Closer to Beijing, Testing U.S.-India Ties

Indian Prime Minister's Office via AP

India is one of the latest countries to be affected by U.S. President Donald Trump’s tariff agenda, which has dampened relations following decades of rapprochement. The Trump administration set an initial 25 percent tariff on Indian goods in early August and an additional 25 percent tariff for India’s purchase of Russian oil — effective August 27 if no deal is reached — making the tariffs on India the highest of any country including the People’s Republic of China (PRC) — Russia’s largest oil importer. However, trade talks scheduled to take place from August 25 to 29 have since been postponed, leaving New Delhi with little hope of relief from the additional tariffs, at least in the near term. U.S. Treasury Secretary Scott Bessent accused India of profiteering from Russian oil by buying it and reselling it elsewhere, effectively engaging in the practice of arbitrage.

The tariffs come as tensions have risen following Trump’s claim that he brokered a cease-fire between India and Pakistan following strikes between the two countries — stemming from the April 22 Lashkar-e-Taiba terrorist attack in India-administered Kashmir — in which India denied Trump's involvement, and improved relations between the U.S. and Pakistan, including a deal to develop Pakistan’s largely untapped oil reserves. Additionally, Trump has expressed interest in Indian agricultural and dairy industries, of which Indian Prime Minister Narendra Modi has vehemently sought to protect. Therefore, the tariffs appear more symbolic than strategic; nonetheless, Trump’s pressure has undermined the mutual trust that U.S.-India relations have developed since the turn of the century.

At this time, New Delhi appears less reactionary to the staggering tariffs, perhaps because it lacks sufficient economic leverage despite being the fourth-largest economy in the world, and does not have a dominant hold on any one sector, unlike the PRC, which has a strong presence in critical minerals. As such, Indian officials have sought to mend ties with the world’s second-largest economy, the PRC. At this week’s meeting, China also promised to help India meet its needs related to rare earth minerals, in addition to a range of other trade and investment initiatives.

For the past 25 years, the U.S. has utilized India as a counterweight to the PRC as part of its Indo-Pacific strategy, but with New Delhi now thawing relations with Beijing following its stand-off with Trump, geopolitical dynamics have temporarily shifted in Beijing’s favor. It remains to be seen whether the PRC will be able to translate this opening into anything tangible, or if relations between the neighbors will revert to the status quo ante once Washington determines how far it is willing to push its allies in terms of tariffs.

This week, Chinese Foreign Minister Wang Yi visited New Delhi to meet with his Indian counterpart, Subrahmanyam Jaishankar, as well as Prime Minister Modi, to discuss bilateral ties. Wang stated in a meeting with Jaishankar that the two “should view each other as partners and opportunities rather than adversaries or threats,” urging cooperation against “unilateral bullying,” according to a statement by the Chinese Foreign Ministry, in what was a thinly veiled reference to the actions of the Trump administration.

In the meeting with Modi, Chinese officials discussed improving relations following military clashes at the Himalayan border in 2020. During the meeting, Modi accepted an invitation to attend the Shanghai Cooperation Organisation (SCO) Summit in Tianjin at the end of the month; this will be the first time the Prime Minister has visited the PRC in seven years and will meet with PRC President Xi Jinping. However, this warming of relations must still take into consideration historic tensions and Beijing’s ties with India’s foe, Pakistan, a relationship that the PRC values and has invested in significantly on multiple levels, including diplomatic, economic, and military.

China’s perspective is shaped by both strategic opportunity and caution. Beijing likely views U.S.-India tensions as an opportunity to draw India closer diplomatically and economically, potentially weakening U.S. partnerships in the Indo-Pacific. In the zero-sum game of great power competition, any U.S. loss is perceived as a victory for Beijing. China will benefit if India signals a willingness to engage in trade and investment. For example, partnerships between Indian technology companies and Chinese companies are expected to increase according to Bloomberg. Additionally, it remains to be seen what may come out of Modi’s participation at the SCO Summit in a couple of weeks.

More broadly, tensions with Washington serve as a stress test for New Delhi’s long-standing doctrine of “multi-alignment,” in which India has sought to avoid formal alliances while maintaining relations with various entities. New Delhi’s tilt closer to Beijing — even temporarily — complicates India’s ability to maintain equidistance between the two powers, exposing the fragility of its policy. Additionally, the shift weakens U.S. strategy in the region by undermining efforts to check China’s influence across Asia. Given that many in the Trump administration view China as the pacing threat for U.S. foreign policy, it has been surprising to see the relationship with New Delhi treated with somewhat wanton disregard. The meeting between New Delhi and Beijing demonstrates that the PRC understands the importance of this potential opening and will marshal the necessary resources to capitalize on Washington’s misstep.

Therefore, India's diplomatic upheaval with the U.S. could force New Delhi to either fortify its policy of “multi-alignment” or abandon it. However, New Delhi’s response to Trump is unlikely to be a binary choice between the U.S. and PRC. It is more likely for India to double down on its policy of “multi-alignment” than to abandon it altogether, with Trump’s tariff threats highlighting the necessity of multiple partners to provide India with more options to maneuver on the global stage.