A Geopolitical Thaw: China-India Rapprochement Amid U.S. Trade Tensions

China has lifted its restrictions on rare earth magnet exports to India, a gesture made during a high-level diplomatic visit. This move, timed with Chinese Foreign Minister Wang Yi's meeting with Indian Prime Minister Narendra Modi and his counterpart, S. Jaishankar, signals a strategic pivot for both nations as they face mounting trade pressure from the United States. Analysts suggest that President Donald Trump's aggressive tariff policies have given both Beijing and New Delhi a greater sense of urgency to deepen their trade relationship.

The diplomatic rapprochement follows a difficult period, including a deadly border clash in 2020. A new border patrol agreement last October helped de-escalate tensions and reopen diplomatic channels, culminating in a meeting between Modi and Chinese President Xi Jinping. The two nations' trade relationship is valued at around $130 billion. The U.S. has recently imposed a 25% tariff on Indian imports, with the threat of doubling it. This mirrors the high tariffs the U.S. has applied to many Chinese goods, prompting both countries to seek alternative partnerships.

China, which controls approximately 90% of the world's rare earth magnet production, has been strategically managing its exports amid geopolitical pressures. The overall export volume for the first seven months of 2025 totaled over 38,500 tons, marking a more than 10% increase compared to the same period in the previous year. For July alone, exports of rare earth products saw a rebound to 7,742 metric tons, a 32% increase from May 2025. Specifically for rare earth magnets, July exports rose by nearly 75% compared to June, reaching 5,577 metric tons.