Trump’s ‘G-2’ turn with China tests India’s global strategy

Trump met Chinese President Xi Jinping in Busan, South Korea, on October 30, marking a significant departure from two decades of US policy that had treated China as a rival and strategic challenger.

In a post on Truth Social, Trump wrote: “My G-2 meeting with President Xi of China was a great one for both of our countries. This meeting will lead to everlasting peace and success. God bless both China and the US.”

Labelling the US-China partnership as the ‘G-2’ carries profound implications for India’s strategic positioning, foreign policy, and economic competitiveness in the evolving global order. For the past two decades, India has been a ‘strategic partner’ of the US and a key member of the Quad — a bloc with Australia, the US and Japan — that Beijing perceived as ‘anti-China’.

Trump’s newly minted G-2 formulation signals a potential recalibration of India’s strategy, which partly relied on Washington to balance Beijing’s growing dominance in Asia through frameworks such as the Quad and the Indo-Pacific strategy.

India faces strategic recalibration

External Affairs Minister S. Jaishankar, in his 2020 book The India Way: Strategies for an Uncertain World, outlined how India must “engage America, manage China, cultivate Europe, reassure Russia, bring Japan into play, draw neighbours in, extend the neighbourhood and expand traditional constituencies of support.”

Recent developments have now pushed India into a delicate phase of ‘managing’ ties with Washington. New Delhi can no longer assume that close alignment with the US automatically enhances regional standing or offers leverage against China.

The progress in India-China border disengagement talks and recent high-level meetings between Prime Minister Narendra Modi and President Xi reflect this changing dynamic. While China remains India’s main strategic rival and border tensions persist, it is also New Delhi’s second-largest trading partner. The G-2 effectively compels India to pursue pragmatic economic and diplomatic engagement with China, even as it strengthens defence preparedness along the Line of Actual Control.

Economic Disadvantage

Tariff dynamics following the Trump-Xi meeting have placed India at a disadvantage. US tariffs on Chinese goods were lowered from 57 per cent to 47 per cent, while Indian goods continue to face 50 per cent tariffs when entering the US — higher than those imposed on China, once America’s primary economic adversary.

India’s tariff burden includes a 25 per cent ‘reciprocal’ component and an additional 25 per cent punitive levy related to Russian crude oil imports. In contrast, China’s daily imports of three million barrels of Russian crude face no such sanctions.

As a result, India’s exports to the US fell 37 per cent between May and September 2025 (from $8.8 billion to $5.5 billion), even as Chinese exports rose from $28.8 billion to $34.3 billion during the same period.

Technology and Security Implications

The G-2 announcement also included US concessions on semiconductor and advanced technology exports to China, triggering strong criticism in Washington. The US House Select Committee on China warned that selling high-end AI chips to Beijing “would be akin to giving Iran weapons-grade uranium.”

Trump indicated openness to allowing export of cutting-edge ‘AI chips’ to China. For India, which has been positioning itself as a trusted technology partner and alternative semi-conductor manufacturing hub, this is seen as a reversal..

Future of multilateral frameworks

The G-2 arrangement raises questions over the future of multilateral groupings where India has invested significant diplomatic capital. The Quad — conceived to forge coordination among democratic partners in balancing China — now appears uncertain if Washington prioritises bilateral management of Beijing. Other initiatives, such as the India-Middle East-Europe Economic Corridor (IMEC) and the Indo-Pacific Economic Framework, may also see reduced US engagement.

Strategic autonomy the way forward

New Delhi must now accelerate defence indigenisation to reduce reliance on foreign suppliers. As the world’s second-largest arms importer, India needs to diversify technology sources and secure critical mineral and semiconductor supply chains beyond the US.

At the same time, an overtly transactional US-China partnership may give India the space to engage both powers selectively. Yet, the volatility of the G-2 arrangement means it cannot replace the network of alliances underpinning Asia’s regional stability.

The G-2’s idea has periodically surfaced since the mid-2000s, reflecting both economic realities and diplomatic aspirations, though it has faced major political and strategic challenges from both sides and attracted unease from other global powers.

The term G-2 was first introduced in 2005, emphasizing that the US and China were becoming the world's most influential economies and should collaborate to manage global issues ranging from the financial system, climate change, and nuclear proliferation to regional security questions.

Then came Barack Obama’s famous ‘pivot to Asia’ in 2011 and the G-2 idea faded. Even today, the G-2 still remains an informal gathering and not an institutionalised grouping akin to G-7 or G-20, and its acceptance depends on shifting political climates and the strategic calculations of both powers.