In a surprising turn of events following the 2025 APEC Summit in Busan, the informal agreement between Donald Trump and Xi Jinping has had significant geopolitical implications. The two leaders met for the first time since Trump’s return to the White House, resulting in a deal that has reshaped the power dynamics in Asia.
Trump decided to reduce tariffs on Chinese imports from 57% to 47%, providing China with crucial economic relief. In exchange, China agreed to resume the export of rare earth minerals for a year, essential components used in various technologies. Trump praised the meeting as a remarkable success, while Xi referred to it as the beginning of a new era. However, for India, the outcome appears more like a disappointment than a breakthrough.
Despite China benefiting from tariff reductions, Indian exports to the US continue to face significant barriers of up to 50%. This discrepancy puts India at a disadvantage, as China gains cost advantages and becomes more competitive. Industries such as textiles, pharmaceuticals, and electronics in India could suffer substantial revenue losses due to this trade gap.
The agreement on rare earth minerals also has negative implications. With China controlling over 80% of the world’s refined rare earth materials, the deal further solidifies its monopoly for another year. India, which had been working on becoming an alternative rare earth supplier through collaborations with countries like Australia and Japan, now faces delays in those plans. Additionally, investments from Western countries in India’s rare earth exploration projects may stall, as the crisis they aimed to address has been postponed.
The message from the Busan Summit is clear – when faced with the need for a political victory, Trump turned to Beijing, sidelining India. Despite India being considered a vital player in the Quad alliance and a democratic counterbalance to China, it was not consulted or prioritized in this deal.
The difference in Trump’s approach towards China and India highlights a stark reality. The volume of trade between the US and China far exceeds that between the US and India. Given the dependency of American industries on Chinese rare earths, striking a deal with Xi captures attention, while negotiations with Modi are viewed more as routine policy matters. Trump’s actions underscore the transactional nature of Washington’s alliances, where deals with immediate benefits for the US take precedence over long-term relationships.
This development serves as a warning for India to recognize that US loyalty is based on strategic interests, and alliances can shift based on short-term gains.