U S-India Trade War Open Doors for Pakistan, Challenge China

In August 2025, U.S.–India–Pakistan relations entered a volatile phase as Washington imposed 50% tariffs on Indian exports while hosting Pakistan’s Army Chief Asim Munir in an unprecedented show of military diplomacy. ABC Live examines the strategic levers the U.S. holds over Pakistan, China’s entrenched influence, Modi’s restrained response, Munir’s bold pitch, and Beijing’s potential countermeasures in South Asia’s shifting power triangle.

New Delhi (ABC Live): U.S.–India–Pakistan relations; In August 2025, U.S.–India–Pakistan relations took a dramatic turn when Washington imposed 50% tariffs on Indian exports, citing trade imbalances, digital trade restrictions, and India’s discounted oil imports from Russia.

Just weeks earlier, U.S. President Donald Trump hosted Pakistan’s Army Chief Field Marshal Asim Munir for an unprecedented White House luncheon — without any Pakistani civilian leaders present.

The timing has sparked debate: is this tactical hedging by Washington, or part of a broader reshaping of U.S.–India–Pakistan relations within South Asia’s strategic landscape?

1. U.S. Strategic Levers Over Pakistan in U.S.–India–Pakistan Relations

Data-backed levers:

Export Market Access: Pakistan exported $6.03 billion to the U.S. in FY 2025 — an 11% increase year-on-year — generating a $2.83 billion trade surplus.
Critical Minerals: Estimated reserves of ~6 million tonnes of copper and untapped lithium in Balochistan.
Counterterrorism Access: Pakistani airspace supported an estimated 80% of U.S. drone missions over Afghanistan between 2004–2020.

Legal context:

U.S. Steel Corp. v. United States (843 F.2d 1274) – affirms the President’s discretion to impose tariffs for national security.
Zivotofsky v. Kerry (576 U.S. 1) – reinforces executive primacy in foreign affairs.

2. China’s Entrenched Assets in the U.S.–India–Pakistan Relations Triangle

Measured assets:

CPEC Investments: Flagship Belt and Road program worth ~$62 billion, spanning roads, energy plants, and digital infrastructure. Official CPEC Framework
Defense Dependency: 82% of Pakistan’s arms imports from 2019–2023 came from China (SIPRI).
Gwadar Port: Strategic BRI hub leased to Chinese entities, with potential dual-use naval capability.

Legal context:

Al-Jehad Trust v. Federation of Pakistan (PLD 1996 SC 324) – requires constitutional scrutiny of executive agreements like CPEC.
Pakistan Steel Mills Corp. v. Government of Pakistan (PLD 2006 SC 697) – mandates transparency in foreign contracts.

3. India’s Role as the Primary U.S. Anti-China Partner in Regional Relations

Metric	India	Pakistan
GDP (IMF 2025)	$4.18 trillion	$0.37 trillion
Defence Budget (SIPRI 2024)	$86 billion	$10 billion
Naval Power	Nuclear submarines; 2 carriers	None

Legal context:

Indira Nehru Gandhi v. Raj Narain (1975 Supp SCC 1) – underscores executive accountability in foreign policy.
Gramophone Co. v. Birendra Pandey (1984) 2 SCC 534 – affirms that international law applies domestically unless inconsistent with Indian law.

4. Narendra Modi’s Strategic Role in U.S.–India–Pakistan Relations

Strategic Patience: Avoided retaliatory escalation to protect long-term U.S. alignment.
Backchannel Diplomacy: Maintained private communications with Washington to separate trade disputes from strategic cooperation.
Domestic Framing: Presented tariffs as a driver for Atmanirbhar Bharat (self-reliance).
Regional Signalling: By staying measured, preserved India’s position as Washington’s indispensable anti-China partner.

5. The Asim Munir Factor in U.S.–India–Pakistan Relations

Direct Military Diplomacy: Bypassed Pakistan’s civilian leadership to engage directly with the U.S. President.
Charm Offensive: Reportedly nominated Trump for a Nobel Peace Prize for preventing escalation in the 2025 India–Pakistan standoff.
Economic Pitch: Positioned Pakistan as a hub for crypto, AI, and critical minerals.
Controversial Remarks: Allegedly made a nuclear threat during his U.S. visit — condemned by India but absent from official transcripts.
Strategic Aim: Expand Pakistan’s diplomatic options, secure U.S. economic incentives, and signal to Beijing the possibility of diversification.

6. The “Friendly Trade War” Theory in the Regional Context

Some analysts suggest the tariff clash could be a good cop, bad cop manoeuvre:

Bad Cop: Tariff tensions demonstrate U.S. independence from India.
Good Cop: Diplomatic warmth toward Pakistan creates an alternative channel of influence.

Probability: ~25% — more likely the disputes are genuine but strategically managed.

7. Pros and Cons for Each Player in U.S.–India–Pakistan Relations

Country	Pros	Cons
India	Maintains anti-China primacy; indirect benefit if Pakistan shifts from Beijing.	Export losses; possible dilution of U.S. exclusivity.
Pakistan	Gains leverage with both the U.S. and China; potential +$600 million export boost.	Risk of Chinese retaliation; domestic political backlash.
U.S.	Wedge influence in China’s closest ally: minerals access, geographic advantage.	Cannot replace China’s role fully; risk of Indian mistrust.

8. China’s Counter-Strategy to U.S.–India–Pakistan Moves

Likely moves by Beijing:

Deepen Control Over Pakistan

Fast-track CPEC Phase-II projects and Gwadar expansion.
Offer debt relief or restructuring to reduce Islamabad’s need for U.S. funds.
Lock in exclusive defence supply contracts.

Economic Pressure on India

Restrict exports of critical inputs such as APIs for pharmaceuticals and electronics parts.
Redirect supply chain investments to Bangladesh or Vietnam.

Regional Isolation of India

Expand influence in Sri Lanka, Maldives, and Nepal through infrastructure and loans.
Promote Pakistan–China–Iran–Russia integration within BRICS+ and the SCO.

Global Counter to U.S. Influence

Highlight U.S. policy volatility to undermine trust among BRI partners.
Expand yuan-settled trade with Pakistan to reduce dollar leverage.

Military Signaling

Conduct PLA Navy drills with Pakistan near Gwadar.
Increase patrols along the LAC to divert Indian military focus.

9. Outlook for U.S.–India–Pakistan Relations

India: May pursue WTO remedies (India – Quantitative Restrictions, DS90) if tariffs persist.
Pakistan: Will hedge between Washington and Beijing, leveraging both for economic and military gains.
U.S.: Will test whether limited openings in Pakistan can disrupt China’s Belt and Road dominance.
China: Expected to escalate both economic and military measures to keep Pakistan firmly in its orbit while pressuring India on multiple fronts.

Bottom Line:
This is not a U.S. pivot from India to Pakistan. It is a calibrated effort to limit China’s monopoly over Islamabad, reassure India’s primacy, and keep South Asia’s strategic balance fluid. Narendra Modi’s restraint preserves India’s core position, while Asim Munir’s direct diplomacy tries to extract maximum advantage from Washington’s interest. China, however, retains powerful levers — from CPEC acceleration to regional military signalling — to counter these moves.

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