India’s hedging strategy to counter Trump’s Tariff Threat

 - Opinion by Arpith John Raj

The main highlight of this week’s news is the SCO summit in Beijing. The importance of this summit should be read along with Trump’s ‘Strategic Tariff Adjustments’, which hampers fair-trade practices and the development of the third world nations, aiming to create a state of sustained dependency. Since assuming the office of the President of the United States of America, Donald Trump had been opting out a strategy of coercive diplomacy using the Sun Tzu’s saying of ‘subdue the enemy without fighting’ it is clear from the instances that Trump wanted his enemies and allies to submit to the primacy of United States, and he want them to be pleading on the ‘Oval office’. Before the economic might of the United States, especially in a liberal global order, no state has had the spine to oppose it individually, surprisingly except one,- China. China was the only state that had reciprocated with counter tariffs on US products to a great extent, which had pressurized Mr. Trump to have a trade negotiation deal with China. This has revived the spirit of the Global South, especially among Asians, as a backup against the betrayal by the ex-apostle of global, free, and fair-trade liberalism.

The miscalculated tariff war has drawn many of the countries affected to China, which could seed diplomatic backlash for the US in the future. It is noteworthy that ‘China’s foreign trade showed signs of stabilization in the first quarter of 2025, with total imports and exports reaching 10.3 trillion yuan ($ 1.41 trillion) and exports rose to 6.9% in the first quarter of 2025 amid the uncertain and highly fluctuating International Trade[i]. All these have led to a ‘reconsidering phenomenon’ among the tariff-affected countries, both enemies and allies alike, to see after the betrayals from the US and to engage more with China, who is more aligned with fair trade practices laid by the WTO. However, contrary to US expectations, the opposite occurred. To engage and submit under US primacy, middle powers like India sought to hedge against the US as a backup option for maintaining their strategic autonomy.

The SCO summit had been made a warm-up play for the Chinese and other countries affected by Trump’s new policy of protectionism, to align within a singular framework to oppose unitedly. It is also noteworthy that the SCO which had been perceived as the Chinese NATO by the US and its Western allies, had been a platform that fostered the sense of betrayal among the Asian powers to coordinate and respond responsibly against the ‘tariff-war’. India which had received similar tariff threats from the US, decided to use ‘strategic hedging’ against the United States by aligning more closely with China, especially in the realm of trade.

Dr. S Jaishankar, the honourable Minister for External Affairs, during his participation in the Council of Minister of Foreign Affairs meeting at the SCO, emphasized India’s willingness to work and build India-China relations in a positive direction based on mutual respect, mutual interest, and mutual sensitivity. He also stated that ‘the differences should not be disputes, nor should competition ever become conflict[ii].’^.  He also took up the point to end restrictive trade measures and roadblocks to economic cooperation with a mention of the Chinese restriction on their critical mineral’s exports. The appeal for the normalisation of India-China bilateral relations against the backdrop of Trump’s tariff war had been an appeal for India to engage in multiple alignments simultaneously to counter the ‘benching’ by a superpower alone. This enables India to swing between nations and stay focused on inclusive diversification through prudent contradictions[iii].

India's efforts to mitigate the potential repercussions of former President Trump's threats are unprecedented. Since April 2025, and even prior to that, India has been an active participant in the de-dollarisation movement, which seeks to diminish the dominance of the US dollar in global transactions. India has been engaging with the BRICS grouping, which primarily consists of nations with a stance contrary to that of the United States. At that time, BRICS was in the process of launching a unified payment system exclusively for its member nations, referred to as the BRICS Currency[iv]. However, in response to concerns over the potential decline of the US dollar's influence, Trump threatened to impose significantly higher tariff rates on all BRICS countries if they move forward with the BRICS currency. However, India has pursued alternative strategies to reduce its dependence on the US. This is what we have seen in India’s approach towards China at the SCO summit. Dr. S Jaishankar engaged with Chinese officials directly after nearly five years, which was not encouraged after the Galwan crisis in 2020[v]. The SCO summit had shaken the heads of the NATO states, who had threatened 100% secondary sanctions against India, China, and Brazil if they continued to have trade relations with Russia[vi]^.  The ‘South-South’ cooperation is something that is unimaginable for the US and its allies. Here is where dependency theory had its classical pre-eminence. Nation states only prefer their self-interest, not the collective good of humanity; that is why it is said that in ‘international relations there are no permanent friends or permanent enemies, only the permanent interest that persists’.  

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i) CGTN. (2025, April 14). China's export rose 6.9% in the first quarter of 2025. Beijing, China.

ii) Jeelani, G. (2025, July 14). On first China visit in 5 years, EAM Jaishankar urges for stronger India-China ties – ‘as neighbouring nations'. Retrieved from Mint : https://www.livemint.com/news/india/on-first-china-visit-in-5-years-eam-jaishankar-urges-for-stronger-india-china-ties-as-neighbouring-nations-11752469503718.html

iii) Kuik, C. C. (2022). Shades of grey: riskification and hedging in the Indo-Pacific. . The Pacific Review 36(6), 1181–1214. .

iv) McCarthy, S. (2025, July 10). CNN Buisness. Retrieved from Trump is threatening tariffs on a Beijing-backed group. What’s got him so worried?: https://edition.cnn.com/2025/07/10/business/brics-tariff-threat-trump

v) Ministry of External Affairs-Statements and Speeches . (2025, July 14). EAM's opening remarks during meeting with Foreign Minister of China Wang Yi. China.

vi) Zengerle, P., & Brunnstrom, D. (2025, July 15). NATO chief says Brazil, China and India could be slammed by sanctions. Retrieved from Reuters: https://www.reuters.com/world/china/nato-says-brazil-china-india-could-be-hit-hard-by-sanctions-2025-07-15/