As tariffs of the Trump administration continue to resonate in international trade during 2025, India and China are having to chart a more multifaceted economic and geopolitical world.

The tariffs, which increase duties on a large percentage of Indian products to almost 50 per cent, are more than just fiscal policy instruments; they are tools of strategic leverage in a changing order.

The economics behind political posturing is more in the middle: trade flows slow down, cost adjustments occur, consumer prices increase, and growth opportunities for India and the United States alike both suffer slight but actual handicaps. Closer examination discloses a game of dependence, resilience, and adaptation being played in this ongoing trade impasse.

India’s FY 2023-24 trade figures highlight its deep embedding in the world system, but also drastic vulnerabilities that tariffs would seek to take advantage of. Officially, India is trading well over $1.5 trillion, with a conspicuous trade deficit of roughly $78.1 billion, the most painful with China. Chinese imports exceed $101 billion, almost 15 per cent of India’s overall imports, while Chinese exports amount to less than $17 billion, consolidating a structural trade deficit of almost $85 billion. This disequilibrium is more than theoretical; it is the extent of India’s reliance on Chinese electronic components, pharma intermediates, machinery, and most notably rare earth elements used in manufacturing and defence. The velocity with which China’s exports fill Indian industrial supply chains is such that tariffs hit not only finished products, but also the inputs supporting whole industries, amplifying the economic blow.

In contrast, India’s trade relationship with the United States is entirely different. The United States is India’s largest market for exports, importing close to $78 billion worth of goods every year and giving India a trade surplus of over $30 billion. This benefit is compounded by India’s thriving services exports – chiefly IT and business process outsourcing – that contribute tens of billions to the nation’s trade surplus with the United States. This combined strength in goods and services makes the US-India trade relationship a critical reservoir of economic influence and political capital, a basis upon which India has to construct carefully in the midst of tariff-related chaos.

The tariffs’ effects on India’s leading export industries are palpable. Textiles, clothing, automobiles, electronics, precious stones and jewellery, all major export earners, have faced stress from higher US tariffs. India’s exports of textiles........

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