India's diplomatic landscape this week is dominated by two significant, yet contrasting, developments: escalating trade tensions with the United States under President Trump and the upcoming Shanghai Cooperation Organisation (SCO) Summit in China. These events highlight the complexities of India's foreign policy as it navigates a world increasingly shaped by protectionism and shifting geopolitical alliances.

The relationship between the United States and India has deteriorated recently, particularly since President Trump imposed a 25% secondary tariff on Indian goods as a punitive measure for New Delhi's continued purchases of Russian oil during the invasion of Ukraine. Trump is threatening to increase tariffs on Delhi by an additional 25%, bringing the total to 50%. These steps, referred to as secondary sanctions, were presented as action against Russia's main energy partners, one of which is India. The White House has argued that the oil purchases fund Vladimir Putin's war on Ukraine, but Indian officials say they stabilize oil markets, adding that Washington had previously approved the purchases.

The US is India's No. 1 trading partner, and New Delhi worries that the tariffs could devastate exporters. Approximately 70% of India's goods exports to the US are exposed to the new 50% tariff. While this equals just 1.56% of the country's GDP and 7.38% of total exports, the blow is concentrated in labor-intensive, high-value sectors like textiles and apparel, gems and jewelry, auto parts, and agricultural products (especially shrimp), all of which directly impact millions of jobs and farmer livelihoods.

In response to these escalating trade tensions, India has hired a second lobbying firm in Washington with ties to the Trump administration. The embassy will be paying $75,000 per month to Mercury Public Affairs LLC to provide government relations, media relations, and other services, under a contract that runs from mid-August to mid-November. This move underscores India's efforts to engage with the US administration and mitigate the potential damage from the tariffs. Some experts recommend that India engage in smart negotiations with the US, provide immediate and targeted relief to hard-hit sectors, diversify export markets, and implement strong domestic reforms to restore competitiveness.

Amidst these challenges with the US, India is also preparing for the SCO Summit in Tianjin, China, scheduled for August 31 and September 1. Prime Minister Narendra Modi will be among the leaders of over 20 countries attending the summit. China attaches great importance to Prime Minister Modi's visit to China for the SCO Summit, and Chinese Ambassador to India Xu Feihong said it will be very important for the summit and bilateral ties between the two nations.

The SCO, a Eurasian political, economic, and security alliance, presents a platform for India to engage with China and other regional partners. At the summit, leaders are expected to sign and release the Tianjin declaration. Chinese President Xi Jinping will use the SCO Summit to announce new measures that Beijing will take to support the organization.

In the lead-up to the summit, there have been signs of a potential thaw in India-China relations. Chinese Foreign Minister Wang Yi visited India in August 2025, during which he invited Prime Minister Modi to the upcoming SCO Summit in Tianjin. Both sides agreed to revive dialogue mechanisms, form new working groups on boundary issues and peacekeeping, and resume direct flights and border trade that had been suspended since 2020. China has also lifted export curbs on rare earths, fertilizers, and urea, signaling economic goodwill, while India sent its first diesel cargo to China in three years. The Chinese Ambassador to India has said that India-China relations have continued to improve and develop since the meeting between the leaders of both countries in Kazan last year. In the first half of this year, bilateral trades between the two countries reached more than 74 billion US dollars, with a year-on-year increase of 10.2 percent.

India's participation in the SCO summit underscores its commitment to multilateralism and regional cooperation, even as it grapples with bilateral trade disputes. The summit provides an opportunity for India to strengthen ties with China and other member states, discuss regional security concerns, and promote economic cooperation.