Imagine this: You run a business selling handmade carpets, jewelry, or garments to the US. Then, from August 27, 2025, the price of your goods suddenly jumps by as much as 50% because of new import taxes. Some buyers cancel orders. Workers in your factory fear losing jobs. This is exactly what Indian exporters faced when the US President Donald Trump’s administration imposed steep tariffs on Indian goods.
Now add a twist. While India is reeling from this economic shock, Prime Minister Narendra Modi lands in Tianjin, China, for the Shanghai Cooperation Organisation (SCO) Summit. Suddenly, this wasn’t just another diplomatic photo-op—it turned into a stage where India had to rethink its foreign and economic strategy.
Trump’s Tariff Bombshell
Trump’s move wasn’t a simple trade measure. It was economic pressure. The new tariff regime raised total duties on many Indian goods to as high as 50%. Industry and Indian government–linked estimates suggest roughly $47–48 billion worth of shipments could face competitiveness risks under the new rates.
Some industries are more exposed than others:
- Garments, home textiles, and carpets risk losing buyers, and some exporters are already reporting cancellations, with Bangladesh, Vietnam, and Turkey positioned as competitors.
- Rice and shrimp exports face acute pressure, with countries like Pakistan and Ecuador potentially gaining market share.
- Jewelry hubs in Mumbai and Jaipur warn of shutdown risks if demand keeps sliding.
- Machinery and auto parts makers in Punjab and Pune report order pressures and delays; exposure varies, as some components face 25% tariffs while others are hit at 50%.
Meanwhile, pharmaceutical formulations and many smartphone assemblies appear less directly targeted or exempt in current tariff lists, though coverage varies by product line and could shift.
For India, this tariff shock was both a crisis and a wake-up call.
Enter the SCO Summit
The SCO is a regional club that includes China, Russia, and several Central Asian countries. India joined in 2017, but until now, it has never given the platform much importance.
This time was different. With the US turning hostile, New Delhi needed to show the world—and itself—that it had other options. The summit became a testing ground for India’s new approach: multi-alignment.
Instead of choosing sides, India is trying to talk to everyone—Washington, Moscow, and Beijing—while keeping its independence intact.
The SCO Summit in Tianjin runs through September 1, and stakeholders are watching for additional announcements today that could support stability and sentiment in Indian markets.
India-China: Signals of Cautious Stabilization
One of the most closely watched moments at the summit was PM Modi’s meeting with Chinese President Xi Jinping. According to official readouts and reported remarks, the two leaders signaled steps toward stabilizing ties:
- They reaffirmed commitments to manage the border peacefully.
- They discussed expanding trade and investment opportunities.
- References were made to improving connectivity and facilitating travel, including flights and visas, though not all measures are immediate.
Of course, deep mistrust remains. But the message was clear: India is willing to keep channels open with Beijing, especially at a time of economic pressure. Analysts call this a phase of “cautious stabilization” rather than a full reset.
Russia, China, and the Local-Currency Hedge
Russia, cut off from the West due to sanctions, pushed for reviving the old Russia-India-China (RIC) trio. For Moscow, India remains a lifeline—it buys Russian oil when few others will.
China, meanwhile, pitched the SCO as a platform for deeper regional integration. Discussions covered cooperation in trade, payments, and digital platforms.
Among the ideas floated was greater use of local currencies—the rupee, ruble, and renminbi—for settlements, as part of a broader effort to reduce dollar dependence. However, this remains an aspiration rather than a formal “R-Block” program, and practical challenges mean it is far from ready.
The Economic Ripple at Home
For India, the tariffs caused two big challenges:
- Exports shrank as Indian goods became less competitive in the US.
- The current account deficit widened, since imports still had to be paid for.
Policy analysts expect Delhi to use this moment to revisit reforms—such as simplifying GST, accelerating manufacturing under “Make in India 2.0,” and considering labor and farm policy changes. These are not yet completed moves, but they are seen as likely policy options.
At the same time, boosting domestic consumption is being discussed as a cushion against export losses. If pursued, such steps could encourage spending at home, but concrete measures and their effects remain to be seen.
Who Wins, Who Loses?
Markets hate uncertainty, and investors pulled back when tariffs hit. The rupee also wobbled. But the outlook isn’t equally bad for all industries.
- Losers (direct exposure): Textiles, gems and jewelry, seafood—highly dependent on US demand.
- Indirect exposure: IT services, not tariffed directly, but potentially affected if US clients cut spending in a slower economy. Auto parts also face mixed exposure depending on product lines.
- Survivors: Pharma and telecom, with less direct tariff targeting and steady domestic demand.
- Potential winners: Energy-linked sectors, infrastructure, and digital payments—though gains depend on how far SCO cooperation and local-currency settlement actually progress.
P.S.: Not a stock recommendation. Please do your research before investing.
What This Means for India’s Future
The SCO Summit didn’t suddenly solve India’s problems. It didn’t create an anti-US alliance either. But it gave India the space to show it won’t be cornered.
India’s big lesson from 2025 is this: depending too much on one market, even if it’s the US, is risky. Diversification is not just a trade strategy—it’s a survival plan.
The Road Ahead
To come out stronger, India will need to:
- Push forward with reforms in taxes, labor, and agriculture, as analysts expect.
- Find new markets in Africa, Latin America, and Eurasia.
- Use forums like the SCO smartly to advance its own goals, not just join the chorus.
India’s strength lies in balance. It doesn’t have to abandon the US or fully embrace China and Russia. Instead, it’s learning the art of managing many relationships at once.
The 2025 SCO Summit was a reminder: the world is multipolar now, and India’s best bet is to stay flexible, stay independent, and play the long game.
In other words, the tariffs might sting today, but they could also be the spark that makes India stronger tomorrow.
FAQs:
Ans: The SCO Summit 2025 in Tianjin, China, focused on economic cooperation, de-dollarization, security collaboration, and shaping the organization’s 10-year development strategy.
Ans: India used the summit to counter U.S. trade pressures, strengthen ties with SCO nations, and showcase its independent foreign policy approach.
Ans: The Tianjin Declaration was a key outcome of the summit, laying out a common roadmap for cooperation in politics, security, and economic development among member states.
Ans: Russia and China pushed for reducing reliance on the U.S. dollar by promoting local currency trade in rupees, rubles, and renminbi, aiming for greater financial independence.
Ans: Yes, Prime Minister Modi and President Xi Jinping held a cautious dialogue on border management and trade, signaling an attempt to stabilize India-China relations.
Ans: The summit emphasized counter-terrorism, drug trafficking control, and proposed new security centers in Tashkent and Dushanbe.
Ans: Yes, China unveiled its AI robot “Xiao He” for assisting journalists, and Russian President Vladimir Putin attended a post-summit military parade in China.
Ans: The summit positioned the SCO as a platform for the Global South, challenging Western dominance, while India maintained a balanced and pragmatic stance.
