US or China? Beijing's Trade Warning Puts India in a Tough Spot

US Vice President JD Vance's upcoming visit to India provided a sigh of hope that the country would be able to strike a trade deal (with the US) amidst heightened uncertainty. However, just when things were starting to look optimistic, China issued a formal warning to all the nations trying to negotiate a trade deal with the US at its expense.

“China firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures,” the Chinese Ministry of Commerce reportedly said.

For India, which is trying to find a middle-point in the tariff chaos via bilateral trade talks, the latest episode in the macro sphere complicates the situation. On the one hand, India cannot avoid trade negotiations with the world's largest economy, while on the other, it depends on China for industrial and consumer goods.

Plus, it is worth mentioning that China is deeply embedded in the global production hierarchy, as per analysts. Global Trade Research Initiative (GTRI) has reportedly said that India should engage with both nations on 'equal terms,' and not by external pressure. The think tank stated that China's warning of retaliation against nations supporting US efforts to isolate Beijing should be seen in the context of global supply chain realities.

India in a tough spot?

Atleast that's what it seems like currently. China remains India's second-largest trading partner, with two-way trade amounting to $127.7 billion in 2024-25, up from $118.4 billion in 2023-24. Meanwhile, the US continues to be India's largest trading partner for the straight fourth year.

And considering that major financial institutions like HSBC are now seeing the US bear the highest impact of tariffs, India might need to take a calculated step.

"India should not be drawn into binary geopolitical rivalries. Instead, it must engage with both China and the US on equal terms, guided by strategic autonomy, economic interest, and global trade principles not by external pressure," GTRI founder Ajay Srivastava told PTI.