London
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This week marks US President Donald Trump’s new deadline for his plan to compel Russia to make peace in Ukraine: hit countries still buying Moscow’s oil with fresh tariffs.
Trump’s foreign envoy Steve Witkoff will travel to Russia Wednesday before the deadline kicks in later this week, according to a White House official.
But if peace in Ukraine still looks remote and Trump goes ahead with his plan, the new cudgel could hit America’s own economy – through more expensive consumer goods, lower profit margins for American companies, and possibly higher oil prices, analysts told CNN.
“The punishment for those countries that continue to take big volumes of Russian energy… would also hurt the United States’ economy in a material way,” said Clayton Seigle, senior fellow in energy and geopolitics at the Center for Strategic and International Studies, a bipartisan US think tank.
The prospective tariffs “would lead to more inflation” in the US, as well as saddle American businesses with higher import costs, he said.
Trump said last month that he would apply a 100% tariff to buyers of Russian oil if his Russian counterpart, Vladimir Putin, did not make peace with Ukraine within a 50-day period – a deadline the US president has since brought forward to this week.
The tariff would apply mainly to imports from India and China, which aren’t just major buyers of Russian oil, but also two of America’s largest trading partners. Last year, the US imported goods worth a combined $526 billion from the two countries, according to official US data.
Both Asian countries ramped up purchases of Russian crude oil following Moscow’s full-scale invasion of Ukraine in 2022, which saw its price fall after Western countries sharply scaled back their imports of Russian fuel.
Russia now accounts for 13.5% of China’s crude imports, according to Vortexa, an energy data firm, compared with 7.7% before the war.
India, meanwhile, imports more crude oil from Russia than from anywhere else: Russian oil makes up 36% of the Indian market.
That has seemingly made India a target of Trump’s ire: on Tuesday, he vowed to “very substantially” raise tariffs on the country “over the next 24 hours” due to its appetite for Russian oil.
Additional tariffs on Chinese goods in particular, which already stand at 30%, would likely lift the price of consumer products in the US, such as iPhones, said Giovanni Staunovo, commodity analyst at UBS Wealth Management, noting that “the US consumer would get upset with that.”
For that reason, while China “might believe” that Trump will enact the new tariffs, it is probably skeptical that he “could sustain the (resulting) economic pain” to America, he said. This suggests the US president could lift those punitive measures soon after imposing them.
China has been here before. Trump introduced steep triple-digit tariffs on Chinese goods earlier this year, only to drastically reduce them later while the two sides negotiate a trade deal. “Trump blinked first (because of) the implication it had on the imports into the US,” Staunovo said.
Squeezing Russia’s oil revenues via secondary tariffs also means throttling the flow of its oil into global markets where prices are set.
“Russia is too big to fail,” argued Staunovo. “Russia exports 7 million barrels per day of crude and refined products. These are massive amounts that you cannot so easily replace.”
Likewise, Kieran Tompkins, a senior commodities economist at Capital Economics, sees an upside risk to oil prices as a result of Trump’s threatened measures, noting last month that Russia’s crude exports are equivalent to a little under 5% of global consumption.
And those global prices matter to the US, which, despite being a massive oil producer, still imports a lot of crude.
West Texas Intermediate, the US oil benchmark, was trading above $65 a barrel late Tuesday morning, according to FactSet data. Its price has fallen 8.8% so far this year.
If Trump does introduce secondary tariffs, they may not be nearly as high as what he has threatened.
Seigle at the Center for Strategic and International Studies believes that much lower levels of between 10% and 30% “would carry more weight” and encourage countries to diversify their oil supplies.
“Draconian levels… will just be perceived as a bluff – because they’ll hurt (the US), just like they’ll hurt the other guys,” he said.
