Donald Trump’s return to the White House has meant a return to the economic weapon he loves best: Tariffs. In his latest salvo against China, the president has raised levies on nearly all Chinese imports, in some cases up to a punishing 245%, excluding only a few politically-sensitive categories like smartphones and pharmaceuticals.
Trump’s message has been blunt: “We’re going to have a deal with China. And if we don’t, we’re going to have a deal anyway, because we will set a certain target, and that’s going to be it.”
China has responded with its own tariffs of up to 125% on American goods.. “China does not want to fight, but it is not afraid to fight,” warned Lin Jian, a foreign ministry spokesperson. The country’s deputy consul in New York, Ma Xiaoxiao, accused the US of “unreasonable demands” and insisted China “will fight to the end… for world order and justice.”
The big picture

Zoom in: The India pivot

As American ports grow hostile and European partners cautious, China is discovering that its once-unshakable export machine now needs new markets. Enter India, a country with which China has shared more tensions than trade affection in last few years
The 2020 border clash in Ladakh left bilateral relations bruised and bloody. India responded with Press Note 3, a regulation that subjects any investment from countries sharing a land border to government scrutiny-read: China. Since then, Chinese tech and electronics firms have found it nearly impossible to expand in India, with many projects stalled or blocked.
And yet, something curious is happening. Chinese companies, once adamant about holding controlling stakes in joint ventures, are now bending over backwards to comply with Indian terms.
Two of China’s top industrial players are leading the shift, a report in the Economic Times said. Haier, ranked third in India’s electronics market, is in talks to sell a 51-55% stake in its Indian operations. A year ago, it was only willing to part with 26%.
Shanghai Highly, a major compressor manufacturer, has revived its joint venture with Tata-owned Voltas, now willing to settle for a minority stake – a far cry from its earlier 60% demand, rejected under India’s Press Note 3 rules.
Haier is also exploring private equity deals, while Highly has struck a technology-only partnership with PG Electroplast, allowing production without equity involvement.
“There is a complete change in attitude,” Rajesh Agarwal of Bhagwati Products told the ET. “Chinese companies don’t want to lose business since India is a big market, and there is scope for exports under the tariff regime. The icing on the cake is the PLI scheme.”
China’s climbdown is happening on India’s terms. But the rules have evolved – not softened.
As per the ET report, India is now clearing joint ventures if:

“This is forced flexibility,” said one Indian electronics executive. “They want access to India’s booming middle class – and more crucially, a backdoor into US markets through Indian manufacturing.”
What they’re saying
Chinese ambassador Xu Feihong, in an interview with The Times of India, acknowledged that “China and India are partners rather than rivals,” echoing the diplomatic tone struck by President Xi Jinping and Prime Minister Modi during a meeting in Kazan last year.
“China has never imposed mandatory restrictions on the export of relevant equipment or the travel of personnel to India,” Xu said. Xu called for mutual respect and fair treatment, noting, “We hope India will take China’s concerns in the economic and trade field seriously, provide a fair, transparent, and non-discriminatory business environment for Chinese enterprises.”
Xu’s olive branch comes amid a broader Chinese charm offensive across Asia. Chinese President Xi Jinping’s visits to Vietnam, Malaysia and Cambodia have aimed to shore up political ties-and find new markets—as the US blockade tightens. Even the European Union is planning a summit in Beijing this July, though with more skepticism than optimism.
What’s next

At the same time, the Indian government is preparing for high-level trade talks with Washington, hoping to carve out a bigger role for Indian exporters as US firms shift away from China. India is moving quickly to capitalize on the moment:

Elephant Trumps Dragon- for now
India’s exports to the US rose 11.6% last year to $86.5 billion, even as smartphone imports from China plunged 70%. At the same time, India’s trade deficit with China widened to nearly $100 billion—driven by its dependence on Chinese electronic components.
This interdependence is shaping a delicate detente. India cannot afford to fully decouple from Chinese inputs, and China cannot afford to lose a market as promising and geopolitically neutral as India. The dance is awkward, but it is underway.
The bigger risk is time. Vietnam, Thailand and Mexico are all vying for the same manufacturing shift, and many of them already have better infrastructure or fewer political landmines. If India hesitates, it may miss its window. If China overreaches, it may find even this limited welcome revoked.
The bottom line
Cut off from the US consumer, Chinese firms are playing by India’s rules. For India, the calculus is clear: Accept Chinese tech, but not Chinese control.
As global supply chains get redrawn under Trump’s tariffs, the world’s two biggest neighbors – long wary and watchful – are inching toward a functional coexistence. Not because they trust each other. But because, right now, they need each other.
In the words of Ambassador Xu: “The key to sustainable, healthy, and stable development of China-India relations is to correctly view each other’s development and strategic intentions.”
For now, the Dragon is learning to dance with the Elephant – one joint venture at a time.
(With inputs from agencies)