President Donald Trump signed an government order Wednesday imposing an extra 25 p.c in tariffs on India over the nation’s purchases of Russian oil, following by way of on his menace to ramp up strain on Moscow to finish the warfare in Ukraine.
The tariffs are set to enter drive inside 21 days, in line with the chief order, and can go on high of the 25 p.c penalty Trump unveiled on India this month.
The order got here hours after a roughly three-hour assembly between Russian and U.S. officers, which didn’t produce a breakthrough. It got here days earlier than the White Home’s deadline for Russia to succeed in a peace cope with Ukraine or face main financial penalties.
Trump has threatened to impose “secondary tariffs” of as much as 100% on international locations that purchase items — primarily power — from Russia if President Vladimir Putin doesn’t shortly stop hostilities in Ukraine.
However he has additionally singled out India, considered one of a number of international locations that buy Russian oil, as commerce talks between the 2 international locations have sputtered over the previous month.
Russia produced about 12 p.c of the world’s crude oil provide in 2024, giving it vital market energy. Regardless of Western sanctions, together with a value cap on Russian oil exports, it has amassed an enormous “shadow fleet” of tankers that enable it to proceed delivery oil.
The oil and fuel sectors account for about 30 p.c of the Russian authorities’s income annually, serving to to maintain its financial system afloat.
China is the most important importer of Russian oil, with $62.5 billion price of purchases final 12 months, adopted intently by India, with $52.7 billion, in line with Brookings Establishment senior fellow Robin Brooks and Vice President in command of economics Ben Harris in an evaluation revealed by the Belfer Heart for Science and Worldwide Affairs on the Harvard Kennedy Faculty.
If secondary sanctions result in a ten p.c drop in Russia’s oil exports, that might enhance the value of Brent crude oil by $6 from its present stage of about $71 per barrel, whereas a 20 p.c drop may trigger costs to spike by $11, Brooks and Harris wrote.
“Both of those will increase would markedly increase the prospects of a recession within the U.S. and lots of different economies across the globe,” they wrote.
China can be the most important general importer of all Russian items, with purchases final 12 months totaling $128.3 billion. Different large patrons embrace India ($65.7 billion), Turkey ($44.0 billion), Belarus ($34.1 billion), Kazakhstan ($17.0 billion) and Brazil ($11.6 billion).
White Home Nationwide Financial Council Director Kevin Hassett, in an interview Wednesday on Fox Enterprise Community, acknowledged that China additionally purchases Russian oil however stated Trump’s focus was at present on India.
“India has been a bit recalcitrant [in trade talks with the United States], but in addition, I feel the president has determined that India shouldn’t be the discharge valve for Russia,” Hassett stated. “And that one motive why the Russia-Ukraine warfare could be happening for therefore lengthy is that Russia has a launch valve by way of India the place it may well promote its stuff.”
Trump, in an interview Tuesday on CNBC, downplayed any potential value affect from secondary sanctions due to his efforts to spice up U.S. oil output. “I’m not nervous about costs as a result of we’re drilling at ranges that no one’s ever seen earlier than,” he stated.
Alternatively, if international locations proceed to purchase Russian oil [and other goods] after Trump imposes 100% tariffs, that might create an efficient U.S. embargo on imports from these international locations, which might increase “the costs of many different items,” elevate the chance of a recession and destabilize monetary markets, Brooks and Harris wrote.
India, in a authorities assertion Monday, referred to as Trump’s menace to single it out for secondary sanctions “unjustified and unreasonable” and hinted at retaliation.
It additionally defended the purchases as needed “to make sure predictable and inexpensive power prices to the Indian client” and accused the US and the EU of hypocrisy for persevering with to buy items from Russia whereas criticizing India.
Megan Messerly contributed to this report.