India and China: Seeking Economic Harmony Amid Tariff Turmoil

Sun Sep 14 2025 01:12:58 GMT+0300 (Eastern European Summer Time)

As U.S. tariffs disrupt trade dynamics, India's Prime Minister Modi heads to China, marking a potential turning point in the relationship between the world's two most populous nations. Both leaders explore economic cooperation while navigating territorial disputes and complex alliances.

With the U.S. imposing 50% tariffs on Indian goods, Prime Minister Modi's visit to China could signify a pivotal shift in Sino-Indian relations, where economic cooperation is vital. Experts speculate about the potential for increased collaboration between India and China while addressing significant historical challenges.

India's Prime Minister Narendra Modi lands in China this weekend with the sting of Donald Trump's US tariffs still top of mind.

Since Wednesday, tariffs on Indian goods bound for the US, like diamonds and shrimp, now stand at 50% – which the US president says is punishment for Delhi's continued purchase of Russian oil.

Experts say the levies threaten to leave lasting bruises on India's vibrant export sector, and its ambitious growth targets.

China's Xi Jinping too is trying to revive a sluggish Chinese economy at a time when sky-high US tariffs threaten to derail his plans.

Against this backdrop, the leaders of the world's two most populous countries may both be looking for a reset in their relationship, which has previously been marked by mistrust, a large part of it driven by border disputes.

Put simply, what happens in this relationship matters to the rest of the world, Chietigj Bajpaee and Yu Jie of Chatham House wrote.

India was never going to be the bulwark against China that the West thought it was... Modi's China visit marks a potential turning point.

What would a stronger relationship mean?

India and China are economic powerhouses – the world's fifth and second largest respectively.

But with India's growth expected to remain above 6%, a $4 trillion economy, and $5 trillion stock market, it is on track to ascend to third place by 2028, according to the IMF.

In this context, experts suggest it’s time to shift focus on how China and India can work together.

However, the relationship is deeply challenging, marked by unresolved territorial disputes and economic fallout from prior tensions, such as the skirmishes in the Galwan Valley in June 2020.

Dialogue will be needed to manage the expectations of other powers who look to India-China as a key factor of Asia's stability, says Antoine Levesques, senior fellow at IISS.

Modi's visit signifies an attempt to recalibrate relations amidst a dynamic geopolitical landscape influenced by the U.S.

India's position has changed

Experts note that while India has historically aligned with the US, its current perplexity with Washington's stance has opened a dialogue with China.

Modi is heading to attend the Shanghai Cooperation Organisation (SCO), which includes key regional partners including China and Russia.

How can China and India cooperate economically?

While India relies on China for certain manufacturing needs, there's potential for greater collaboration in sectors like electronics, where both could find mutual benefits.

As Modi’s visit unfolds, it will set a tone for future interactions amidst the underlying complexities and historical rivalries that define Sino-Indian relations.