Trump’s Pursuit of a Partnership With China Raises Concerns in India

Trump China India: Delhi fears US pivot to Beijing after Washington expands trade talks

Muhammad Asghar | GlobalBeat

Donald Trump and Xi Jinping have revived dormant US-China trade negotiations during a May 23 call that bypassed India in Asian security talks.

Indian intelligence agencies warn the renewed courtship could produce a bilateral technology and tariff deal excluding New Delhi from supply-chain negotiations by September.

India depends on both powers. Washington sells it weapons worth $5 billion a year while China eats a fifth of its farm exports. Any trade rapprochement between Trump and Xi that eases equipment tariffs would narrow India’s electronics markets and leave its refiners paying more for U.S. heavy crude.

The May 23 call, confirmed by a White House readout, lasted 85 minutes and covered “constructive economic engagement”, rarer outreach than the tariff battles that defined Trump’s first term. Officials briefed reporters on background that Trump wants a narrow limited deal on agritech and cyber standards by October. India did not feature in the outline.

News of the agenda flagged in Delhi. Foreign Minister Subrahmanyam Jaishankar postponed a Brussels tech meeting to chair an extraordinary China-desk review on May 23 night, according to one Indian diplomat who was present. The diplomat spoke on condition of anonymity because no statement has been released.

Trump’s first call to Xi after retaking office had thrilled India when it happened February 5. At the time Trump warned Beijing against coercion on the LAC, a clear nod to Delhi’s 2020 border clashes with China’s People’s Liberation Army. The hint of a tougher U.S. stance helped Jaishankar announce a $100 billion investment target for U.S. drone makers two weeks later.

The mood has flipped. Analysts in Delhi now worry that widening U.S. budget deficits will drive Trump toward a quick trade windfall. “Any substantial concessions offered to China could inadvertently come at India’s expense,” said Gautam Bambawale, former Indian ambassador to Beijing. His assessment was shared by three other retired diplomats contacted on May 24.

Washington’s pivot remains ambiguous. The White House statement after the call praised a path to removing some tariffs on Chinese solar panels, a sector where India has also lobbied for relief. U.S. customs data shows India exported just $64 million of photovoltaic cells to the United States last year against $2 billion shipped by China even under tariff cover. Equal relief would widen the gap again.

India Inc feels the chill. Oil-refiner Nayara Energy raised U.S. oil orders by 30 percent during the terms of first-term Trump hoping to win exemption from Iran sanctions, according to two traders. Board members fear that if Washington strikes a separate power-export channel with China they could be stuck competing with subsidized Chinese state shippers for the same barrels. The traders were not authorized to speak publicly.

For Indian tech vendors, any U.S. rollback of counter-tariffs on China means cheaper servers flooding the region. “It would push domestic fabs deeper into loss,” said Arjun Rao, director of Delhi-based chip supply chain firm Sirius Advisors. Rao’s clients include a joint venture designing 28-nanometre wafers in Gujarat, a project pitched as an answer to Taiwan’s dominance for U.S. buyers. He said the venture’s margins are already negative.

Pentagon planners who have courted Delhi as a counterweight are also uneasy. Admiral John Aquilino, outgoing chief of U.S. Indo-Pacific Command, told Congress this month that China’s railway build-up along the Bhutan border could “surprise” India before winter. Losing India’s focus while Beijing negotiates, he added, would be “strategically risky”. Aquilino’s comments were on the record.

Trump’s China policy swings are not new. He opened a $250 billion export deal package with Xi in 2017 then slapped tariffs in 2018. In between those dates India scrapped its China-dominated Regional Comprehensive Economic Partnership talks citing trade imbalance. Delhi fears a partial U.S. reset today would force it into a tighter defensive posture even as its own exports slide, shrinking the trade surplus that keeps its rupee afloat.

Market signs already flash concern. The rupee slid 0.9 percent against the dollar on May 23, its steepest day of the month. Import cover stood at 10 months, lowest since 2022. Government bond yields climbed to 7.04 despite a cheaper oil basket. Domestic investors cited the China-Russia manoeuvres in the South China Sea as the nearest excuse but traders privately tied the fall to Trump uncertainty, said Madhavi Arora, economist at Emkay Global.

Background

Delhi-Washington ties warmed under Barack Obama and Joe Biden after decades of suspicion tied to India’s non-alignment. The signing of the 2008 civilian nuclear deal triggered billions in defense sales. By 2020 Trump was calling India the “key pillar” of his Indo-Pacific strategy, a label that raised China’s ire when deadly skirmishes broke out on the Himalayan frontier between Chinese and Indian troops that June, killing 24 soldiers.

Yet Trump also mocked India’s tariff wall against Harley-Davidson motorcycles in 2019 and labelled Delhi the “tariff king”. Modi responded by cutting the duty from a 100 to a still-stiff 50 percent. Despite the friction, strategic convergence drove both governments to create the Quad alliance with Japan and Australia. India’s military still imports up to 60 percent of hardware from Russia but recent U.S. offers of F-414 jet engines and Sea Guardian drones show the courtship had momentum headed into 2025.

What’s Next

Jaishankar will raise his objections in a June 4 visit to Washington where talks with Secretary of State Marco Rubio are already scheduled. Indian analysts expect Delhi to lobby for a technology transfer firewall that keeps Taiwan, Korean and Japanese chipmakers invested on Indian soil regardless of any U.S. China tariff rethink. The bid could pivot on U.S. Export-Import Bank credits for Gujarat and Karnataka fabs due for Cabinet approval in September.

UPSHOT: If Trump and Xi’s narrow trade bargain emerges, India may have to arm-twist Washington with bigger defense contracts or risk losing export ground. Delhi’s choice will help decide whether Washington can truly keep both Beijing and India inside its economic orbit.