The air is rife with the possibility of a deal between the US and China during Donald Trump’s current swing through Asia, culminating in the APEC summit in South Korea. Negotiators from the world’s top two economies are said to have hashed out a framework for a deal that may involve China deferring export controls on rare earth minerals, increasing agricultural purchases from the US and curbing the movement of precursor chemicals for the opioid fentanyl into America. In exchange, Washington could roll back part of the tariff wall imposed on Chinese imports since 2018. As a classic Trumpian manoeuvre, this one will again reset equations.
In the last few months, tensions between China and the US have flared up because of punitive reciprocal tariffs, conflicting stances on global conflicts and confrontational language. While the Trump administration slapped a 100 per cent tariff on Chinese imports and restricted the supply of advanced semiconductor chips, Beijing responded by imposing export controls over rare earth materials and related processing technologies. These measures had the potential to disrupt the global supply chain, as China produces about 90 per cent of the processed rare earths and rare earth magnets. These elements are critical for the manufacturing of electric vehicles, heavy industries, smartphones, jet engines and military technologies. However, good sense prevailed and the two sides realised the pitfalls of their structural bifurcation and the inter-dependence of their economies.
If that happens now, India, like the rest of the region, will have to adapt to a new phase in US-China relations. Our foreign policy mandarins will have to re-examine long-held assumptions about American purpose, Chinese ambition and the strategic space available to middle powers like us. This may demand a far more open and agile Indian discourse on foreign policy and national security.
Typically, Trump’s move will cause disruption. Eight years ago, during his first presidential term, Trump’s 2017 Asian tour set the tone for a sharp balancing of China. He broke with four decades of bipartisan consensus at home on engagement with Beijing and launched an overt policy of confrontation – framing China, along with Russia, as a strategic rival. In Asia, he sought to rally regional states into deeper bilateral alliances and promoted new coalitions such as the Quad to constrain Beijing’s assertiveness. Trump also articulated the Indo-Pacific framework that explicitly highlighted India’s role in stabilising Asia and its waters. That, in fact, had set the context for expanding the India-US partnership in recent years.
This time, Trump’s focus will probably be commercial. His second-term agenda put trade at the centre of America’s foreign policy and aims to reset economic relations not only with China but also with allies that had good access to US markets. This ‘business-first’ approach has also been coupled with an extortionist impulse towards long-standing allies like Japan and South Korea – which have been compelled to promise investments worth $900 billion in the US. Despite the widespread determination in Asia to appease Trump, there is no denying the seething resentment among the allies at this coercion.
Yet, over the past week, Trump declared his commitment to partnerships with ASEAN, Japan and South Korea. He appeared intent on walking a tightrope – rebooting ties with Beijing, without alienating America’s traditional partners. Whether that balancing act will hold remains to be seen. At home, Trump may face criticism for doing a deal with Xi, while allies abroad will surely question the credibility and durability of US economic and security commitments under his leadership. But does Trump care?
For Asia – and for India in particular – the fine print of this arrangement will matter enormously. Asian governments will closely scrutinise the actual tariff rates and the extent of market access that follows, since these will shape export prospects to the US and the reconfiguration of industrial supply chains across the Indo-Pacific.
Our foreign policy establishment will now have to navigate this unstable US-China dynamic, shaped by both rivalry and rapprochement. New Delhi’s challenge is to remain nimble – engaging Washington where interests align, probing economic opportunities with Beijing where feasible and strengthening partnerships across Asia and Europe to accelerate its own rise in the regional and global system. Of course, we do not have the leverage that a tech and economic giant like China has, but then, this is the test of our national leadership, which must rise to the occasion, instead of obsessing about just how to win elections. There is no other go.