US President Donald Trump’s oil tariff situation has caused its fair share of controversy. This tool has been implemented as a method to try and force Russia into ending the war with the Ukraine. An upcoming secondary tariff threat is also looming. The plan is for this to be imposed on those countries who purchase oil from Russia. The indirect fears associated with this is the potential impact that this will have on oil prices as well as the global economy.
Guidelines determined by tariffs
From punishing Brazil to trying to curb imports of fentanyl, U.S. President Donald Trump has wielded the threat of tariffs as an all-purpose foreign policy weapon. With a Friday deadline for Russia to agree to peace in Ukraine or have its oil customers face secondary tariffs, Trump has found a novel, but risky, use for his favorite trade tool. The administration took a step toward punishing Moscow’s customers on Wednesday, imposing an additional 25% tariff on goods from India over its imports of Russian oil, marking the first financial penalty aimed at Russia in Trump’s second term.
No order has been signed for China, the top Russian oil importer, but a White House official said on Wednesday secondary measures that Trump has threatened against countries buying the petroleum were expected on Friday. As of 2024, China imported approximately 108,5 million tons of crude oil from Russia. These are the latest in a string of Trump’s tariff threats on non-trade issues.
Economic impact of current changes
These issues are things such as pressing Denmark to give the U.S. control of Greenland, attempting to stop fentanyl deliveries from Mexico and Canada, and penalizing Brazil over what he described as a “witch hunt” against former President Jair Bolsonaro. While secondary tariffs could inflict pain on the Russian economy – severing a top source of funding for Russian President Vladimir Putin’s war effort – they also carry costs for Trump.
There is “close to zero chance” Putin will agree to a ceasefire due to Trump’s threats of tariffs and sanctions on Russia, said Eugene Rumer. Rumer was a former U.S. intelligence analyst for Russia and Eurasia. He worked at the US National Intelligence Council between 2010 to 2014. Currently, he directs the Carnegie Endowment for International Peace’s Russia and Eurasia Program. Secondary tariffs would hurt Russia, the world’s second leading oil exporter.
Utilizing oil as a leveraging tool
The West has pressured Russia since late 2022 with a price cap on its oil exports, intended to erode Russia’s ability to fund the war. That cap has piled costs on Russia as it forced it to reroute oil exports from Europe to India and China, which have been able to import huge amounts of it at discounted prices. In an early sign that Putin hopes to avoid the tariffs, the White House said that Putin and Trump could meet as soon as next week, following a meeting between U.S. envoy Steve Witkoff and the Russian leader on Wednesday.
Brett Bruen, former foreign policy adviser for former President Barack Obama now President and CEO of the Global Situation Room consultancy, cautioned that Putin has found ways to evade sanctions and other economic penalties. China has demonstrated leverage over the U.S. by cutting off mineral exports and new tariffs would upset a delicate balance negotiated since May to restart those flows critical to a host of U.S. industries. India has leverage over generic pharmaceutical exports and precursor chemicals to the U.S.
There seems to be a noble cause behind the whole tariff-issue, namely, to end the war between Russia and the Ukraine. But the more direct consequence of all this may not be as pleasant as one would hope for. The ideal situation would be for more thought to be put into this situation to decide the best course of action for overall compliance as well as economic stability. The implementation of secondary targets imposed on countries still making use of the oil imports from Russa will also have its set of consequences.
GCN.com/REUTERS.