As the calendar turned to February 2026, a series of seismic shifts rippled through Asia and the Pacific, all with one common denominator: China. From trade corridors in South Asia to military deployments in Australia, and from political turmoil in Bangladesh to election-year saber-rattling in Japan, Beijing’s influence is being felt—and fiercely contested—across the region.
On February 8, 2026, US President Donald Trump announced a significant relaxation of tariffs on India. According to Dow Jones & Company, the US slashed reciprocal tariffs from 25 percent to 18 percent and withdrew a 25 percent penalty tariff, a move tied to India’s decision to cut crude oil imports from Russia. The policy shift is more than just a bilateral trade adjustment; it’s a calculated move in the ongoing chess match of Asian geopolitics, where trade, security, and alliances are increasingly intertwined.
India’s response to these trade incentives has been nothing short of transformative. Over the past decade, India’s export basket has undergone a dramatic makeover, with electronic goods leaping from seventh to third place between 2014 and 2025. Their share of exports jumped from 2.4 percent to 9.4 percent, and production of electronic goods skyrocketed sixfold—from $21.3 billion in 2014-15 to a staggering $127 billion in 2024-25. India now stands as the world’s second-largest manufacturer of mobile phones, a feat fueled not just by domestic initiatives like the Make in India campaign and the Productivity Linked Incentive (PLI) scheme, but also by a steady stream of critical components from China.
Indeed, China has been the linchpin in India’s electronics surge, supplying nearly 39.7 percent of the country’s electronic imports, including essential items such as PCBs, display panels, and semiconductor devices. This relationship, while often fraught with tension, has become indispensable for India’s new industries, particularly as traditional sectors like textiles and agriculture have receded in importance. In 2024-25, electronics and engineering goods together accounted for 34.4 percent of India’s total exports, more than doubling their share since 2000-01.
The Trump administration’s tariff relaxation is expected to give India a decisive edge over competitors like Vietnam in the race to capture the lucrative US market. According to a recent analysis, Vietnam held a 4.0 percent share of US imports in 2024, compared to India’s 2.7 percent. However, Vietnam faces a punishing 45 percent transshipment tariff on goods rerouted through its territory to disguise their origin—an effort to clamp down on the backdoor entry of Chinese products into the US. Nearly a third of Vietnam’s exports to the US in 2022 were reportedly rerouted by China, a loophole now being aggressively targeted by Washington.
With India’s electronic goods exports to the US accounting for 17.6 percent of its total exports to America in 2024-25—and crucially, exempt from US reciprocal tariffs—the stage is set for India to outpace Vietnam and cement its status as a key player in the global electronics supply chain. As one Indian trade analyst put it, "Trump’s tariff relaxation will give an edge to India to challenge its nearest competitor Vietnam." The move is also likely to deepen India’s reliance on Chinese components, even as New Delhi maintains a restrictive policy on Chinese foreign direct investment due to security concerns.
But while India’s trade fortunes are on the upswing, its diplomatic ties in South Asia are facing new headwinds. Bangladesh, long considered a close partner, is undergoing its own dramatic transformation. The country’s February 12 elections—the first since a student-led uprising toppled former Prime Minister Sheikh Hasina’s autocratic regime in August 2024—are expected to reshape the region’s balance of power. According to analysts cited by international wire services, Beijing is seizing the opportunity to consolidate its influence, while India’s decision to shelter the ousted Hasina, despite extradition requests, has infuriated Dhaka’s interim government led by Nobel laureate Muhammad Yunus.
Yunus’s administration has wasted no time in deepening engagement with China and Pakistan, signaling a possible realignment that could further complicate India’s strategic calculus. As one senior Bangladeshi official said, "India’s actions have forced us to look elsewhere for reliable partners." The evolving situation in Bangladesh underscores the delicate balancing act New Delhi must perform as it seeks to expand its economic clout while managing complex security and diplomatic relationships in its neighborhood.
Meanwhile, across the East China Sea, Japan is grappling with its own China dilemma. On February 9, 2026, Japanese voters went to the polls in a snap election where, although China wasn’t on the ballot, its shadow loomed large. Prime Minister Sanae Takaichi, known for her hawkish views, made waves in November 2025 by declaring that Japan could intervene militarily if China attacked Taiwan—a stark departure from previous policies that avoided explicit references to Taiwan in the context of security threats.
Beijing responded with swift economic reprisals: restricting Japanese seafood imports, discouraging tourism to Japan, and signaling possible limits on the export of critical minerals. The dispute has become a flashpoint in the election campaign. Younger voters, like 22-year-old college student Aoi Nakamura, have rallied behind Takaichi’s tough stance. "Japan should maintain a firm stance without making any compromises," Nakamura said outside a Tokyo polling station, as reported by The New York Times.
Yet, not everyone is convinced. Critics argue that Takaichi’s approach has exposed Japan to dangerous economic coercion, particularly given the country’s dependence on rare earth minerals from China. Her supporters, however, see a decisive victory as a clear message to Beijing that Japan will not be cowed by threats. As her allies put it, a strong mandate would show that "Tokyo will not back down in the face of Chinese threats."
Amid these shifting alliances and rising tensions, military planners are also making moves to prepare for potential conflict. According to Dow Jones & Company, the US is set to deploy up to four nuclear-powered submarines to HMAS Stirling, a naval base in Western Australia, by 2027. The base, which is receiving billions of dollars in Australian investment, will serve as a strategic outpost—bringing American submarines closer to any potential flashpoint over Taiwan and providing a safe haven if hostilities erupt. The deployment is part of a broader push to integrate US and Australian military capabilities, a move explicitly aimed at deterring Chinese aggression in the region.
From the whirring assembly lines of Indian electronics factories to the tense polling stations of Tokyo, and from the political upheaval in Dhaka to the fortified docks of Western Australia, the contest for influence in Asia has entered a new and unpredictable phase. China’s economic might, strategic ambitions, and the responses of its neighbors are shaping a future where trade, security, and politics are more entwined than ever. For the region’s leaders—and its people—the stakes have rarely been higher.