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| Chinese President Xi Jinping (R), Indian Prime Minister Narendra Modi (C) and Russian President Vladimir Putin (L) chatting at the Shanghai Cooperation Organization summit in Tianjin, China, September 1, 2025. |
Beneath the icy Himalayan peaks separating the two Asian giants lies a chilling narrative of mistrust. In 2020, Indian and Chinese troops clashed in the Ladakh region, resulting in the worst border conflict in almost five decades, with four Chinese and twenty Indian soldiers losing their lives. This confrontation didn't finish there, but continued with freezing diplomatic channels between the two countries, affecting trade and overall regional stability. China imposed limitations on imports from India, which retaliated with new curbs on Chinese investments and banning dozens of Chinese applications on its territory, TikTok being the most prominent one. However, the emerging political standoff revealed a complex interdependence between the second and third global economies, with their trade turnover rising throughout this period of heightened tensions.
August 2025 brought the first top-level signs of rapprochement, kindled partly by the U.S.'s unpredictable political posturing under President Trump. His aggressive tariff policy included steep, “reciprocal” tariffs on India, initially 25 percent, later increased to 50 percent, aimed to punish the country's excessive imports of Russian oil. These actions are expected to deal a serious blow to U.S. - Indian trade ties, currently valued at $200 billion annually. It will severely affect the country's rising manufacturing sector, which has experienced unprecedented growth fueled in large part by American companies' outsourcing parts of their businesses to South Asia. India immediately responded by accusing the U.S. of disparately targeting it while sparing China, whose imports of Russian oil were even larger. However, its response didn't end there, but continued with initializing the first serious pivot to the northern neighbor in years.
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| Indian Prime Minister Narendra Modi and Chinese President Xi Jinping meet on the sidelines of the BRICS summit in Kazan, Russia, October 23, 2024. |
By this point, China and India had already been inching toward more constructive engagement. Since Modi's meeting with Xi Jinping at the BRICS summit in Kazan in October 2024, both sides began easing travel restrictions: Beijing permitted Indian pilgrims to visit holy sites in Tibet, while India issued tourist visas to Chinese nationals. Now, the threat of Trump's tariffs created a corridor for diplomacy to sneak back in. In August 2025, Chinese Foreign Minister Wang Yi made a two-day visit to New Delhi for the 24th round of India–China boundary talks with National Security Adviser Ajit Doval. The outcome of the meeting was significant beyond the existing format of the talks and previous modest expectations, ushering a new period of rapprochement between the two powers. Several key issues were addressed, with positive results.
Firstly, direct flights between the two countries are set to resume, ending a suspension that had lasted since the onset of the COVID-19 pandemic. Secondly, the border trade is set to reopen via Lipulekh, Shipki La, and Nathu La, reigniting cross-border economic activity. Thirdly, both countries agreed to explore “early harvest” mini-agreements to advance boundary delimitation and maintain peace within the WMCC (Working Mechanism for Consultation and Coordination on India-China Border Affairs) format. On its part, China pledged to share hydrological data during emergencies, while an expert-level cooperation mechanism was established to address Indian concerns over dams like the one envisioned on the mega-project on the Brahmaputra River.
The recent breakthroughs signal a hopeful but still fragile reset of relations. With direct flights and basic trade resuming, diplomatic infrastructure needed for this is being rebuilt brick by brick. Modi's visit to China for the Shanghai Cooperation Organisation (SCO) summit was his first in seven years and seemed to anchor even deeper collaboration. Both countries are poised to co-lead future BRICS events, India hosting in 2026 and China in 2027, offering platforms to synchronize agendas around the common push for multipolarity, supply chain security, and the overall development of the Global South. Nevertheless, numerous issues still remain, with the border question yet to be conclusively resolved, riverine trust fragile, and strategic competition between the two apparent. India will need to balance economic caution and national security, while China navigates rising regional and global challenges.
In light of these developments, it increasingly appears that Trump's tariffs are not meeting their intended objectives. In fact, they may be driving America's global rivals closer together. The selective targeting of Indian oil imports from Russia, while sparing, or even indirectly accommodating, China, undermines the credibility and coherence of U.S. policy. As things now stand, India is set to bear the full brunt of Trump's punitive measures, enduring up to 50% tariffs on its exports. Meanwhile, China, by far the largest Russian oil buyer, has so far escaped similar sanctions, and despite threats from the U.S. President, he has “no imminent plans to penalize it.” The official justification for this is that India's imports of Russian oil have risen sharply, by more than 70% since the start of the Ukraine war in 2022, compared to a much smaller increase in Chinese purchases. With Beijing still remaining the larger buyer overall, and India not showing signs of changing its long-established energy policy, the White House explanation of the disparity doesn't seem to amuse anyone.
To compound this inconsistency, the U.S.'s stance toward the Russian Sakhalin-1 oil and gas project is striking. On August 15, 2025, Russian President Putin issued a decree paving the way for ExxonMobil to potentially reclaim its 30% stake in Sakhalin-1, subject to strict conditions like financing, supplying foreign-made equipment, and lifting of specific sanctions. This move, closely timed with his summit with Trump in Alaska, signals a paradox: while Indian companies are punished for trading with Russia's oil, a major U.S. energy corporation may be invited back into a landmark Russian energy venture. Exxon had previously written off $4.6 billion upon exiting the investment in 2022.
What could have been a coherent U.S. strategy to rein in Russia for its actions in Ukraine instead ended up looking like selective enforcement. It raises questions about Washington's credibility in demanding energy restraint from partners while eyeing a return to investment in Russia's oil and gas itself. In this case, such contradictions have so far only alienated India from the U.S., pushing it into a new chapter of realignment with China, without dealing any measurable damage to its long-standing partnership with Moscow.
