Trump yesterday threatened tariffs of about 100% on Russia unless it reached a peace deal with Ukraine in the next 50 days, saying the levies would come in the form of “secondary tariffs”.
Matt Whitaker, the US ambassador to Nato, later said the planned action effectively represents secondary sanctions on countries buying oil from Russia.
“It’s about tariffs on countries like India and China that are buying their oil,” he told reporters.
Global markets – increasingly skeptical of Trump’s near-daily tariff threats – largely shrugged off the news, suggesting there’s little concern around any potential impact on crude flows.
Trade analysts said the proposed levies would be difficult to police and, if implemented, could well backfire on the US.
“It remains unclear how exactly you would do this, and how China or anyone would certify that they’re meeting the US requirement,” said Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore.
“It’s going to add more fuel to the fire of why these countries are skeptical of receiving a deal from Trump,” Elms said.
Trump’s latest threat comes at a crucial time in negotiations with both Asian nations.
India is closing in on an agreement that would see 20% so-called reciprocal levies on the South Asian nation before a final deal is reached in the fall.
Prime Minister Narendra Modi’s government has struck a more defiant stance with the US in recent weeks as frustration with Trump has grown.
US ties with China, meanwhile, appear on the upswing after the world’s two largest economies reached a trade truce in May.
Secretary of state Marco Rubio last week said a meeting between Trump and President Xi Jinping was likely for later this year.
Yesterday, Nvidia Corp said the US would allow the resumption of sales of its H20 AI chip to China – the biggest sign yet that the White House is easing export controls on Beijing in return for rare-earth minerals needed to make a range of high-tech products.
“Despite the temporary truce in the trade war between China and the US, there’s still a lot uncertainties on other fronts,” said Zhu Feng, executive dean of Nanjing University’s School of International Studies. “A secondary tariff will bring even more chaos and China will surely respond forcefully.”
India became a major importer of Russian oil since the invasion of Ukraine in early 2022, and China’s imports have also climbed over the same period.
Washington policymakers view those stepped-up oil purchases as a form of tacit support for Russia that helps buoy the nation’s economy and weakens the impact of sanctions.
“Any major threat to China’s energy security could create new frictions in the fragile trade truce between the world’s top two economies,” said William Yang, International Crisis Group’s senior analyst for Northeast Asia.
Secondary levies that threaten India’s access to cheap oil could also further erode ties between Trump and Modi.
“Whatever little trust and goodwill is left in the US president will soon get dissipated if the US keeps pushing its arbitrary actions related to tariffs,” said Abhijit Das, international trade policy expert in Delhi.
“As a part of its trade talks, India should demand that the US avoid such arbitrary tariffs,” Das said.
Trump’s latest salvo comes as countries deepen their trade and diplomatic relations in the face of US policy volatility.
Russia’s foreign minister Sergei Lavrov was in Beijing this week, where he met China’s top diplomat, Wang Yi, and was also received by Xi, who said the two nations should deepen “comprehensive strategic cooperation”.
India’s external affairs minister Subrahmanyam Jaishankar held talks with his Chinese counterpart yesterday during his first visit in more than five years, as the Asian neighbours strive to repair relations strained by the deadly 2020 border clashes. Jaishankar met with Xi today.
“All these tariff threats are indeed working to bring the BRICS together,” said Amitendu Palit, senior research fellow and research lead on trade and economics at the Institute of South Asian Studies.