India and China Aim for Economic Reboot Amidst US Tariff Challenges

Wed Oct 22 2025 18:51:09 GMT+0300 (Eastern European Summer Time)

As tariffs imposed by the US threaten India's export sector, Prime Minister Modi heads to China to explore a business reset. The meeting between Modi and Xi Jinping raises hopes for improved relations despite longstanding disputes.

In light of severe tariffs on Indian goods by the US, Prime Minister Modi's upcoming visit to China may signify a pivotal opportunity for India and China to enhance their economic relationship. Experts indicate that both nations could benefit from collaborating amidst global trade challenges, but unresolved territorial disputes pose significant barriers.

India and China Aim for Economic Reboot Amidst US Tariff Challenges

As tariffs imposed by the US threaten India's export sector, Prime Minister Narendra Modi is set to travel to China this weekend, seeking a potential business reset. The tariffs, now standing at 50% on key exports such as diamonds and shrimp, have raised alarms about the impact on India's vibrant economy, which is pursuing ambitious growth targets.

Chinese President Xi Jinping is also looking to revive a sluggish economy amid similar stresses from US tariffs. This meeting comes against the background of a historical relationship marred by mistrust and significant border disputes. Experts warn that the dynamics between these two populous nations will undoubtedly influence global trade.

Economically, the stakes are high. India, projected to reach $4 trillion in GDP with growth rates above 6% by 2028, may elevate its status to the third-largest economy. Meanwhile, the continuous economic struggle in China demands a renewed focus on partnerships.

Notably, unresolved territorial disagreements complicate matters, exemplified by the violent clashes in 2020 over the Galwan Valley. The need for economic dialogue has never been more urgent as both countries navigate a highly competitive global arena, especially with the looming threat of further tariffs from the US on nations within the BRICS group.

As Modi attends the Shanghai Cooperation Organisation meeting, the potential for a thaw in relations with Xi could signal to Washington that India is exploring diverse partnerships. Although immediate changes may appear limited amid ongoing disputes, the optics of unity between China and India could reshape perceptions in global trade negotiations.

While structural challenges persist, including dependency on Chinese manufacturing and unresolved political tensions, experts agree that this meeting holds promise for fostering a productive dialogue that could alleviate barriers. Modi's visit reflects a strategic step towards a more balanced economic future for both nations.