Opinion India does not have the economic leverage vis a vis the US that China does

Between December 2022 and July 2025, China accounted for about 47 per cent of all crude oil and 44 per cent of the coal exported by Russia, as against India’s corresponding purchase shares of 38 per cent and 20 per cent. Despite that, US President Donald Trump has slapped India with a 25 per cent “penalty” for buying Russian energy. This rate, to be effective from August 27, would take the total tariff on Indian goods imported into the US to 50 per cent. China has not only escaped such punishment, but has actually seen a lowering of the duty on its goods from 145 to 30 per cent since May 12. On Monday, Trump extended his trade truce with China for a further 90-day period till November 10. At the same time, his Treasury Secretary, Scott Bessent, has threatened additional “secondary tariffs” on India if the outcome of Trump’s Friday meeting with Russian President Vladimir Putin isn’t favourable.

This blatantly divergent treatment, further eroding the credibility of the current Western sanctions regime, has significantly to do with relative economic leverage — China is seen to possess much more of it. The most visible demonstration of that was when, in early April, it imposed export restrictions on rare earth elements and magnets that are indispensable, whether for auto, aerospace, defence, semiconductor, renewable energy or consumer electronics manufacturing. China could use its virtual global monopoly over the mining and processing of these critical minerals to bring Trump to the negotiating table. Rare earths apart, China also played the trump card of being a massive buyer of US agricultural produce — from soyabean, cotton and coarse grains to beef, pork and poultry meat — sharply reducing the imports of these to signal its capacity for retaliation in any unilateral trade war.

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On the face of it, India does not have that sort of economic leverage. Barring, say, pharmaceutical products, much of what it exports to the US — readymade garments, gems and jewellery, frozen shrimps, basmati rice or even steel and aluminium — aren’t items for which there are no alternative suppliers. Nor are Indian imports of California almonds comparable to the humongous quantities of Midwest US soyabean and corn that China was, until recently, sourcing to feed its swine and poultry birds. Given how much it stands to lose in any prolonged trade war — the worst-affected industries are also the most employment-intensive — the best approach for India to adopt is strategic patience. What the Indian foreign policy establishment and its trade negotiators should emphasise is the country’s importance to global economic and regional stability, which aligns with the US’s own long-term interests.