Tariffs in Washington, Modi to Tokyo and Tianjin

Diplomatic Engagement in Asia 

As India faces trade conflagration with the United States, Prime Minister Narendra Modi is visiting Japan and the Shanghai Cooperation Organization Summit looms. President Trump has indicated that access to Russian oil comes at the cost of exports to the United States, forcing a tradeoff for New Delhi not simply between economics and security, but rather between different formations of economic security. While India can find a degree of economic diversification in new partnerships, India's geoeconomic strategy is constrained by its economic dependencies. 

Chinese Foreign Minister Wang Yi visited New Delhi last week — his first trip to India in over three years — where he met with Prime Minister Modi, External Minister Jaishankar, and National Security Advisor Ajit Doval. The two sides agreed to restore direct flight connectivity and increase trade and investment through promised “concrete measures.” Beijing endorsed India's bid to host the 2026 BRICS Summit, while New Delhi expressed support for China's SCO presidency and its own 2027 BRICS hosting bid. 

Prime Minister Modi’s upcoming delegation to the Shanghai Cooperation Organization Summit in Tianjin from August 31-September 1 will mark his first visit to China in seven years. Preceding the fora, Modi is currently (August 29) visiting Japan at the invitation of Prime Minister Ishiba. The two leaders agreed to an “economic security framework” between Tokyo and Delhi, setting an investment target in India of $68 billion and targeting cooperation in semiconductors, critical minerals, artificial intelligence, and pharmaceuticals. Before Modi's visit to Tokyo, Vikram Misri, India's Foreign Secretary, iterated that New Delhi intends to increase cooperation with Japan through the Quad on issues including economic security, infrastructure development, and promoting regional stability.   

Russia has also signaled its interest in reviving trilateral meetings with India and China, with Modi and Vladimir Putin set to meet on the sidelines of the SCO. Roman Babushkin, Deputy Chief of Mission for the Russian Embassy in Delhi, said that Moscow eyed the resumption of Russia-China-India trilateral meetings.  

Economic Constraints

Against this diplomatic backdrop, India’s economic dependencies remain central.  

While the data highlight the importance of China and India to the American economy — together accounting for 16.5 percent of U.S. exports and 9.0 percent of total imports — India’s own trade imbalance with China showcases severe economic vulnerabilities. In 2024, bilateral trade in goods reflected a $93.8 billion deficit, with imports exceeding exports at a ratio of more than 7:1. China is dominant in critical sectors, supplying a large portion of India’s imported integrated circuits, antibiotics, semiconductor devices, and transformers.

Even more pronounced is India's energy dependence on Russia. India has a $59.3 billion trade imbalance with Russia, with a lopsided import-export ratio of nearly 12:1. Russia’s exports to India are primarily goods classified under HS Code 27, including mineral fuels, mineral oils, and products of their distillation, accounting for 89.1 percent of India’s total imports from Russia.

Accounting for 20.7 percent of India's global exports, the American export market is irreplaceable for India. New Delhi’s exports to the United States are six times higher than to China and nearly nineteen times higher than to Russia. Even when combining all Shanghai Cooperation Organization (SCO) countries — together representing $26.2 trillion in GDP and 23.5 percent of the global economy — they do not rival the United States as an export market for India. India’s 2024 exports to SCO members totaled $23.4 billion, barely a quarter of its exports to the U.S.

This, ultimately, is the dilemma of India's geoeconomics strategy. The explicit linkage between trade policy and India’s energy access represents an attempt by the United States to force clearer alignment decisions. As Modi prepares for engagements in China and Japan, New Delhi must contend with the reality that these meetings are both a response to and amplification of constrained choices and increasingly exclusive foreign policy relationships.  

India’s balance — maintaining energy ties with Russia, specialized imports from China, and access to the American consumer market — illustrates the flexibility and the vulnerability of its position. While diplomatic arrangements may reduce border tensions and create opportunities in multilateral forums, the economic dependencies between India and its economic partners remain. China, the United States, and Russia are each crucial for India's continued development, and the country cannot afford to weaken economic ties with any one of these countries.  

How India navigates these competing pressures in the coming weeks will depend on the scope and duration of potential American tariffs on Indian imports. Future negotiations will signal what kind of concessions the White House seeks in order to reduce these tariffs and establish a baseline tariff rate — if a baseline is intended and credible. Equally important will be the viability of alternative markets to absorb Indian exports, including whether the “concrete measures” for expanding bilateral trade and investment discussed during Wang Yi’s recent visit materialize and help New Delhi diversify its export destinations. At the same time, the United States’ ability to offer cost-competitive alternatives to Russian energy will directly shape India’s capacity to comply with American demands. And, even if relations between Washington and Delhi become increasingly frosty, intermediaries in Tokyo, other capitals, and minilaterals like the Quad could serve to sustain shared strategic priorities across the Indo-Pacific. 

India’s inability to maintain unfettered access to U.S. markets, Chinese supply chains, and Russian energy will force a series of tradeoffs — not simply between security and economics but between different formations of economic security. These are not unique choices, but rather choices that governments will contemplate as global trade restricts and economics securitizes.