Will US tariffs push India closer to China?

The latest move by the United States to slap a cumulative 50% reciprocal tariff on Indian products has unlocked one potential fault line in the otherwise growing Indo-US relationship. While India has been aligning more closely with the US in recent years, these new barriers to trade can put economic ties, which were thought to be the key to counterbalance China's influence, under strain. 

If US's economic pressure becomes larger, one possible scenario would be India starting to look for more trade, investment, and even strategic engagement with China in spite of the underlying tensions that have characterised their relationship. Such a shift may take time, but it could open the door for India to re-engage more seriously with China, particularly in trade and regional economic frameworks.

In this ever-changing world, the question is whether India would find it practical to reconsider cooperation with China in the shared interests of the two countries, particularly if the US market becomes less accessible. I can visualise that India might turn around its retreat from the Regional Comprehensive Economic Partnership (RCEP), which it had withdrawn from in 2019 out of fear of an imbalance of trade, primarily with China. But if US tariffs continue to suppress India's export potential, then the economic rationale for joining a giant Asia-Pacific free trade block like RCEP could prove irresistible over earlier reservations. 

It would not only bring India closer to China and ASEAN economies, but would also be a dramatic realignment of regional balance and exercise of economic power. This would involve India and China potentially developing frameworks that provide a new platform on which to base regional economic standards, even if this entails methods of keeping their rivalries within these structures.

If such developments were to unfold, they would represent a dramatic shift in the geopolitical balance. A more economic convergence of India and China, driven not by ideological transformation but by strategic imperative, would threaten much of the old thinking that has conditioned international relations over the past decades. It would destabilise unity of US-led alliances in Asia as India repositions itself within a changing global power balance. 

These trends may not materialise instantaneously, but they are harbingers of a seismic geo-political realignment. While deeply complex and not without risk, such a realignment would underscore the way that economic choices, such as the US tariff hikes, have wide-ranging strategic consequences, ultimately redrawing the global geopolitical landscape in unexpected ways.

Selim Raihan is a professor at the Department of Economics of Dhaka University and the executive director of the South Asian Network on Economic Modeling (Sanem).