- India signs major trade deals with the U.S. and EU in early February 2026, gaining significant leverage over China.
- The deals create new tensions within the BRICS bloc as India assumes its chairmanship for the year.
- China reduces its U.S. Treasuries holdings to $682.6 billion, their lowest since 2008, amidst these geopolitical shifts.
In a significant geopolitical shift in early February 2026, New Delhi secured back-to-back trade agreements with both the United States and the European Union. These deals have dramatically altered India and China relations within the BRICS bloc, which India now chairs. Consequently, analysts note India has gained greater strategic leverage over Beijing across multiple dimensions.
The U.S.-India trade framework, announced on February 6, 2026, will cut American tariffs on Indian goods by half. Ambassador Jamieson Greer stated “President Trump’s dealmaking is unlocking one of the largest economies in the world for American workers and producers.” This agreement followed the landmark India-EU free trade pact, hailed by both sides as the “mother of all deals.”
Meanwhile, the timing coincides with internal BRICS tensions as India’s westward economic tilt complicates cooperation. Ivan Lidarev, a research fellow at the National University of Singapore’s Institute of South Asian Studies, stated “India is likely to gain greater leverage in its relations with China as a result of the trade deals.” Professor Lin Minwang noted bilateral ties had already “hit rock bottom” but were “unlikely to deteriorate further.”
In a related financial move, Chinese regulators on February 9, 2026, advised major institutions to reduce U.S. Treasuries holdings over concentration risks. This accelerated portfolio rebalancing pushed the 10-year Treasury yield to 4.25%. Holdings fell to $682.6 billion in late 2025, their lowest level since 2008.
Professor Xi Junyang at the Shanghai University of Finance and Economics explained the decrease is due to “increased optimisation and diversification of holdings of foreign assets.” Consequently, the geopolitical and economic landscape is being reshaped as India gains leverage through its new trade partnerships.
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