Secret Xi Letter Revived India Ties After Trump Tariff Barrage

Back in March, when US President Donald Trump was ratcheting up his trade war with China, Beijing began a steady and quiet outreach to India.

President Xi Jinping wrote a letter to Indian counterpart Droupadi Murmu — who is primarily a figurehead — to test the waters on improving ties, according to an Indian official familiar with the matter. The letter expressed concern about any US deals that would harm China’s interests and named a provincial official who would steer Beijing’s efforts, the person said, adding that the message was sent across to Prime Minister Narendra Modi.

It wasn’t until June that Modi’s government began making a serious effort to improve relations with China, the person said, asking not to be identified in order to discuss internal matters. At the time, trade talks with the US were turning contentious and officials in New Delhi were bristling over Trump’s claims of brokering a ceasefire between India and Pakistan following four days of fighting in May.

Fast forward to August, and the rapprochement between India and China appears to be accelerating. Stung by Trump’s tariffs, both nations took a major step last week to move beyond a deadly 2020 border clash by agreeing to redouble efforts to settle their border disputes, which date back to the colonial era. And this weekend, Modi will make his first trip to China in seven years.

The India-China detente has deep implications for the US, which had carefully courted New Delhi over the past few decades during successive administrations to be a counterweight to an increasingly powerful China. Trump upended that dynamic by imposing 50% tariff on Indian exports due to its purchases of Russian oil, an abrupt shift that shocked Modi’s government.

“Trump is indeed the great peacemaker — he deserves all the credit for stimulating the incipient rapprochement between Delhi and Beijing,” Ashley Tellis, senior fellow at the Carnegie Endowment for International Peace and a former US diplomat in New Delhi, said ironically. “He has singlehandedly pulled this off by treating India as an enemy.”

India’s Ministry of External Affairs, Modi’s office and China’s Ministry of Foreign Affairs didn’t respond to requests for information.

As early as January last year, Modi had been quietly exploring ways to defuse tensions with China. Facing an election at the time, Modi’s officials argued that improved ties with Beijing would benefit a wobbling economy as concerns mounted over the cost of keeping forces stationed along the remote 3,488 kilometer (2,167 miles) unmarked border, people familiar with his administration’s thinking said.

Since the middle of 2023, the two sides had narrowed their differences over pulling back troops along the border, the people said, although the agreement fell through because of minor issues. A proposed meeting between Xi and Modi on the sidelines of the BRICS meeting in Johannesburg in 2023 was subsequently shelved.

Shortly after Xi’s letter to India’s president in March of this year, Beijing published a statement from the Chinese leader celebrating the relationship, describing it as a “dragon-elephant tango.” Soon, his top officials like Vice President Han Zheng were using the same phrase to describe warmer ties between the countries.

National Security Adviser Ajit Doval is driving the engagement as one of the few Indian officials with trusted, direct channels to China’s top leadership, one of the people familiar said. Doval is serving as India’s special representative for border talks, and traveled to China in both December 2024 and June 2025.

In July, Indian External Affairs Minister Subrahmanyam Jaishankar met with Chinese counterpart Wang Yi in Beijing, the first such visit in five years. The Indian diplomat urged China to avoid “restrictive trade measures and roadblocks” — an oblique reference to Beijing’s recent curbs on rare earths that disrupted supply chains. China assured India of supplies of fertilizer and rare earths during the meeting, officials in New Delhi said at the time.

In the weeks that followed, there’s been a succession of incremental steps to improve ties. Direct flights between the two are set to resume as early as next month. Beijing has eased cubs on urea shipments to India. And Modi’s government allowed tourist visas for Chinese nationals after years of curbs.

The Adani Group is also exloring a tie up with Chinese EV giant BYD Co. that would allow the conglomerate controlled by billionaire Gautam Adani — who is seen as close to Modi — to manufacture batteries in India and extend its push into clean energy, Bloomberg News has reported. Reliance Industries Ltd. and JSW Group have also been pursuing under-the-radar deals with Chinese firms as bilateral relations thaw.

Last week, Modi welcomed the improvement in relations with China after meeting Wang in New Delhi. Modi and Xi will meet on Sept. 1 while attending the Shanghai Cooperation Organisation summit in Tianjin, a city near Beijing.

While prospects for any significant new accord within the regional grouping are slight given Pakistan is also a member, it’s possible to see meaningful moves on the sidelines. Back in 2017, at a Group of 20 leaders summit in Hamburg, Germany, Modi walked up to Xi to directly resolve a standoff between Indian and Chinese soldiers at Doklam near the border between the two nations and Bhutan.

Modi told Xi the border tensions weren’t in either country’s interest, according to people aware of the details of the rare act of unscripted diplomacy. Xi agreed and the two leaders said they’d ask their diplomats to get working on a solution, the people said, asking not to be named as the discussions were private. The tense 74-day standoff ended a few days later.

The frank exchange, one of almost 20 encounters over the years, has made Modi one of Xi’s most frequent interlocutors behind Russia’s Vladimir Putin. Even back when Modi was running the western state of Gujarat, Beijing hosted him several times, including at the Great Hall of the People.

The economic logic of improved ties is incontrovertible.

China’s slowing economy is mired in deflation, with overcapacity in industries like electric vehicles and solar panels only making matters worse. India, with its 1.4 billion youth-skewed population, could be a potential new market as China faces rising protectionism in the US, Europe and elsewhere.

Indian officials, meantime, are increasingly realizing they need Chinese investments in factories if they’re ever to meet Modi’s fledgling ambition to boost manufacturing toward 25% of GDP. If steep American levies remain, Bloomberg Economics calculates some 60% of India’s exports to the US would vanish, shaving almost 1% off GDP in the medium term.

India’s economic ambitions have been stymied by restrictions from both sides of the border. The bulk of Foxconn Technology Group’s Chinese staff at iPhone plants in southern India were told to return home earlier this year, Bloomberg News has reported, and officials in Beijing have encouraged regulatory agencies and local governments to curb technology transfers and equipment exports to India.

“The economic possibilities are huge if the two countries can settle differences and build trust,” said Antara Ghosal Singh, a fellow at the Observer Research Foundation, a New Delhi based think tank.

“Leaders of both countries have often spoken about economic possibilities but haven’t been able to get over trust issues,” she said. “Trump is a good incentive for both countries to reconsider their options.”

To be sure, there’s still much skepticism on both sides.

China’s close relationship with Pakistan remains an impediment. A research group under India’s Ministry of Defence in May said China provided Pakistan with air defense and satellite support during a clash with India in April. Pakistan also used Chinese-supplied weapons in the fighting.

While India doesn’t recognize Taiwan, commercial and people-to-people contacts have increased in recent years, raising concerns in Beijing. India also remains a member of the Quad — a security grouping with the US, Australia and Japan aimed at counterbalancing China. The leaders of all four member countries are expected to attend an upcoming summit in India later this year.

Another impediment is the so-called “Tibetan government-in-exile” and succession issues when the 90-year-old Dalai Lama passes away. China’s government has asserted that the selection procedure and the candidate must have Beijing’s approval, citing a 1793 imperial ordinance.

With such a long list of potential pitfalls, both sides are likely to pursue a gradual approach to normalizing ties.

Cui Hongjian, a former Chinese diplomat who worked in the Chinese consulate in Mumbai from 2004 to 2007, said he expects Xi will tread cautiously and only play a more important public role once relations are more clearly improving, preferring instead establishing more formal mechanisms to guide bilateral ties.

“At the very beginning, Xi tried to develop personal relations with Modi, but it looked like it didn’t work,” Cui said. As long as problems persist, “I don’t think he’d like to have a closer relationship,” he said.

For now, the moves to normalize relations between New Delhi and Beijing remain incremental.

“China-India relations are on an indisputably positive trajectory, but they are still mostly recovering the losses in their relationship,” said Jeremy Chan, a senior analyst on the China and Northeast Asia team at Eurasia Group, who once worked as a diplomat in China and Japan. “Getting significantly further from here will be more challenging.”