President Donald Trump’s tariff campaign is reshaping trade alignments, pressuring capitals to choose between Washington and Beijing (and, by extension, Moscow). In the past week alone, India signalled closer engagement with China even as Mexico moved to harden its stance on Chinese imports, while Europe advanced a tariff détente with the US.

India: defying pressure, deepening China ties

India is set to increase purchases of discounted Russian oil in September despite US pressure, reinforcing energy links that underpin New Delhi’s autonomy. At the same time, Prime Minister Narendra Modi will visit China Aug. 31–Sept. 1 for his first trip in seven years, meeting President Xi at the SCO summit—an overt signal that India won’t be pushed into the US camp by tariffs alone.

Mexico: tightening with the US, turning screws on China

Mexico is preparing new tariffs on Chinese imports—covering autos, textiles and plastics—with measures expected in its 2026 budget proposal. The shift tracks with Washington’s aim to keep China out of North American supply chains ahead of USMCA renewal talks next year.

Europe: tariff truce to head off escalation

The EU proposed removing tariffs on US industrial goods, clearing the path for Washington to cut auto duties on EU cars to 15% from 27.5% under a July understanding. Member states and the European Parliament still need to sign off, but Brussels says tabling the law meets Washington’s condition for lowering auto tariffs. German industry groups have already pushed back, warning of uneven benefits.

Stuck in the middle: Japan (and others) navigate the fine print

Japan’s chief trade negotiator abruptly canceled a Washington trip meant to advance a tariffs deal, citing unresolved issues—including how new levies stack on top of existing duties. Tokyo still expects another round of talks, but the hiccup illustrates how hard it is to implement fast-moving tariff frameworks.

Why this week matters

  • Tariffs are now steering choices, not just prices. India is hedging toward China, while Mexico is aligning more tightly with the US to protect market access.
  • Policy spillovers are real. Europe’s sweeping offer to scrap industrial tariffs is designed to pre-empt a broader transatlantic rupture—and calm auto makers.
  • Execution is messy. Even countries that strike deals face domestic pushback and technical snags (rules, stacking, carve-outs). Japan’s pause underscores that complexity.

Trump’s tariff regime is turning trade into a geopolitical sorting hat. Some partners (Mexico, EU) are moving to lock in US ties; others (India) are diversifying toward China/Russia. Expect more country-by-country deals, more carve-outs, and plenty of friction as governments try to convert political agreements into operational tariff codes

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