The Dragon and Elephant Dance Together as Trump's Trade War Reshapes Asia

The world's two most populous nations are finding common ground in an unlikely place: Donald Trump's trade war. Chinese President Xi Jinping called China and India "good neighbors, friends and partners" in a congratulatory message for India's Republic Day, marking a dramatic shift from four years of bitter border disputes.

This isn't mere diplomatic pleasantry. It's a strategic recalibration driven by economic necessity as Trump's tariff blitz threatens both Asian giants' global trade ambitions.

From Bloodshed to Business

The 2020 border clash between Chinese and Indian troops was deadly serious. At least 20 Indian soldiers and 4 Chinese soldiers died in hand-to-hand combat along the disputed Himalayan frontier. India's response was swift and punitive: it banned TikTok, restricted Chinese investment, and froze bilateral cooperation.

Yet economics proved more powerful than politics. Despite the diplomatic freeze, bilateral trade continued growing, crossing $130 billion annually. The message was clear: these neighbors couldn't afford to completely decouple, no matter how bitter their rivalry.

The breakthrough came in October 2024 at the BRICS summit in Kazan, Russia. Xi and Prime Minister Narendra Modi held their first formal talks in five years. Xi's metaphor was telling: China and India as "the dragon and the elephant dancing together."

Trump's Unintended Consequence

Trump's return to the White House has inadvertently pushed the Asian rivals together. His administration slapped 50% tariffs on Indian exports and over 30% on Chinese goods, suddenly giving both countries a common adversary in Washington.

The timing isn't coincidental. Modi attended the Shanghai Cooperation Organization summit in China last August, signaling his commitment to improved ties just days after Trump's tariff announcements. India has since announced the resumption of direct flights with China after a five-year hiatus and is reportedly considering easing investment restrictions on Chinese companies.

Reshaping the Asian Order

This rapprochement extends far beyond bilateral trade. China and India together represent nearly 40% of the world's population and increasingly significant economic clout. Their cooperation through platforms like BRICS could challenge Western-dominated international institutions.

For American allies in the region, this creates a complex new dynamic. Countries like South Korea and Japan have long navigated between Chinese economic opportunities and American security guarantees. A China-India partnership could force these nations to recalibrate their own strategic positioning.

The implications for global supply chains are equally significant. If the world's largest and most populous nations coordinate their economic policies, it could accelerate the formation of alternative trading blocs that bypass Western-controlled systems.

Unresolved Tensions

Yet fundamental challenges remain. The 2,100-mile disputed border hasn't been resolved, and strategic competition between the two Asian powers continues. Military buildups along their frontier persist, and both nations harbor deep suspicions about each other's long-term intentions.

China's growing influence in South Asia through its Belt and Road Initiative still concerns New Delhi, while Beijing remains wary of India's deepening security ties with the United States through the Quad partnership.