Trump targets Russian oil deals, drags BRICS closer together

Donald Trump’s trade crackdown is doing the exact opposite of what he wanted. Instead of isolating China, it’s now giving Beijing and New Delhi a reason to cooperate.

According to Bloomberg, tensions between the U.S. and the two biggest economies in Asia are forcing India and China to look past years of mistrust and start exploring economic options together.

This week, Chinese Vice President Han Zheng used a very deliberate metaphor. He said it was time for a “dragon-elephant tango,” a pitch for closer ties between China and India.

China and India, who fought deadly border battles in 2020 and have clashed for decades over issues like Kashmir and influence in the Global South, are being pushed into dialogue again. And Trump is the reason the music is playing.

Modi and Xi open talks as rare earths and Russian oil complicate trade

Since they became modern states in the late 1940s, India and China have taken turns being either uneasy neighbors or outright enemies. Prime Minister Narendra Modi and President Xi Jinping still can’t agree on Beijing’s support for Pakistan, and both want to be seen as the voice of the Global South. But when it comes to making and exporting stuff, both sides are under pressure.

Modi has watched China’s rise with a mix of caution and frustration. China built up its factories by combining cheap labor with imported technologies, then flooded global markets. India, still struggling to become a global manufacturing hub, is trying to figure out how to catch up.

Modi’s top economic adviser argued in 2023 that India should bring in more Chinese investment to help build its factories and sell goods to the U.S. Indian economists have even said publicly that China might be India’s “natural partner.”

Meanwhile, Xi knows India’s population and market size matter. Beijing wants to sell more cars, solar panels, and electronics, and India has the demand. But China also wants to make sure India doesn’t do to them what they did to the U.S.: dominate manufacturing and drive competitors out.

There are clear frictions. On July 14, Indian External Affairs Minister Subrahmanyam Jaishankar met with Chinese Foreign Minister Wang Yi in Beijing. Jaishankar urged Wang to avoid “restrictive trade measures and roadblocks,” a swipe at Beijing’s new controls on rare earth exports.

Wang answered by calling for more “communication and coordination” to keep supply chains stable. The next day, Jaishankar met with Xi himself, a rare meeting that sent a very clear message about China’s priorities.

Trump targets Russian oil deals, drags BRICS closer together

At the same time, Trump is turning up the heat again. His latest threat? “Secondary tariffs” on any country that buys oil from Russia. India and China are at the top of that list. Since Russia invaded Ukraine in 2022, both have been buying discounted Russian crude and refusing to criticize President Vladimir Putin. They’re also still active BRICS members.

Trump’s threat wasn’t specific, but trade experts are warning that it could blow up in Washington’s face. If enforced, it might push BRICS nations into even tighter economic cooperation, just to protect themselves from U.S. pressure. And if that happens, China and India — despite their differences — might find common ground simply to avoid getting boxed in by Trump’s policies.

There’s already tension over what counts as “Made in India.” The U.S. wants at least 60% of a product’s value to be added locally before it gets that label. India says 35% should be enough. That percentage matters because the higher it goes, the more it cuts China out of India’s supply chains. And yet, India still needs China’s machines and parts to hit its export goals.

China also needs India. It’s dealing with shrinking demand at home and needs new markets. India’s 1.4 billion people offer a chance to offload excess production, not just in electronics and vehicles, but in entire industrial sectors. The fact that both sides are talking now, despite a rocky past, shows just how much pressure they’re under.

It’s not that they suddenly trust each other. They don’t. But there’s no deep hatred between them like there is between China and Japan. They have history, sure, but it’s not nuclear-level animosity. That makes economic talks possible, even if they’re awkward.

Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top sites