A fresh escalation in US-China trade tensions — this time over rare earth minerals — could open the door to a long-awaited US-India trade agreement, according to the Global Trade Research Initiative (GTRI).
The think tank says that Donald Trump’s latest tariff offensive against Beijing has pushed Washington to strengthen ties with trusted partners like India, as it races to secure critical mineral and manufacturing supply chains.
“China’s tighter control over rare-earth exports and a deepening US-China trade war are forcing Washington to rethink its strategy with allies,” said Ajay Srivastava, founder of GTRI.
Why This Matters
Rare earth minerals are vital for producing magnets used in automobiles, electronics, and defence systems. China currently controls over 80% of global supply, giving it significant leverage over global manufacturing.
As Xi Jinping’s government tightened export controls on these minerals, the US retaliated with plans to raise tariffs on Chinese imports — now expected to exceed 100%.
This policy shift has unexpectedly benefited India. “The realignment could accelerate a trade deal with India, with the US likely offering 16–18% tariff access — higher than the EU and Japan,” GTRI reported.
India’s Position in the Trade Talks
India currently faces 50% US tariffs, among the steepest for any major economy. Many of these duties stem from Trump’s earlier foreign policy decisions, citing India’s purchases of Russian oil as “funding the Ukraine war.”
Despite past tensions, Trump often describes Prime Minister Narendra Modi as a “great personal friend.” Diplomats now say the White House’s renewed outreach shows Washington’s desire to fast-track a trade pact.
An Indian negotiating team is presently in Washington for the sixth round of talks that began in April but stalled in August. “We are in deeper discussion now… and both sides are exploring a win-win solution,” a senior government official told ANI.
Potential Deal Terms
Analysts say the US will likely seek greater access to India’s markets in medical devices, dairy, and technology services, while India will defend its red lines in agriculture, e-commerce, and digital trade.
GTRI cautioned that India must avoid accepting any “anti-China” clauses that could constrain its strategic autonomy.
“India must hold firm on its red lines in agriculture, digital trade, and intellectual property,” the think tank noted.
Geopolitical Undercurrents
With the global race for rare-earth supply chains heating up, Washington’s pivot toward India could help both nations reduce dependence on China.
“Ambassador-designate Sergio Gor’s recent meetings with Indian officials were very positive,” an official said. Gor even gifted Modi a photo signed by Trump, with a handwritten note reading: ‘Mr Prime Minister, you are great.’
Trade experts believe a deal could be sealed sooner rather than later — “because Washington wants it.”
