How Trump’s “secondary tariffs” on Russia hit global economy

Although Russia is the most approved country in the world, it continues to use its enormous energy wealth to finance its war in Ukraine.

U.S. President Donald Trump hopes to change that. He has Announce new secondary tariffs If a ceasefire with Ukraine is not agreed on Friday, August 8, it will affect any country that is still dealing with Russia.

Secondary tariffs will see goods from any country facing transactions with Russia 100% tax When they are imported to the United States.

Oil and gas are Russia’s largest exports, with Moscow’s largest customers including China, India and Türkiye.

“I did a lot with trade, but it’s great for solving wars,” Trump said last month.

This is not the first time the Trump administration has imposed secondary tariffs, and it is also the secondary tariffs that punish Venezuelan oil buyers.

However, confronting Russia will have a greater impact on the global economy.

Russia remains the world’s third largest oil producer, second only to Saudi Arabia and the United States itself. However, according to a Bloomberg Analysis Ship tracking data.

“Second tariffs on Russian energy buyers could impact the critical channels in the global economy will pass through energy price levels,” said Kieran Tompkins of consulting firm Capital Economics.

If the tariffs are in effect, they will reduce the flow of Russian oil and gas to global markets.

As supply decreases, prices may rise, just as Russia did during its full-scale invasion of Ukraine in 2022. This has led to a surge in global inflation. President Trump said he was not worried because of record U.S. oil production.

Mr Tompkins noted that this time, there are other reasons to suggest that the impact on the price will not be marked.

“The current background is the background of OPEC+ (the major producers and their allies) with huge backup capabilities,” he explained.

Russia has designed a holistic regime to avoid existing sanctions, which may be useful in helping its trading partners avoid secondary tariffs threatened by Trump.

For example, its so-called “shadow fleet” (composed of hundreds of tankers with obscure ownership) could be used to mask the origins of exports to Russian oil and gas.

“Sanctions are as big as imposing sanctions,” said Richard Nephew, a U.S. sanctions expert at Columbia University.

“That’s because the approved parties take steps to escape them.”

India has been the second largest buyer of Russian oil since the full invasion of Ukraine in 2022. According to the Center for Energy and Clean Air Research.

President Trump told us on Tuesday CNBC: “They are cheering for the war machine.

If secondary sanctions come into effect, companies that purchase goods from India in the United States will have to pay 100% import or customs duties when these products arrive on our coast.

The idea is that it makes these goods so expensive that American businesses will choose to buy them easily from elsewhere, resulting in a loss of revenue from India.

This, in turn, should prevent India from buying Russian oil. And if Russia cannot sell oil elsewhere because other countries face the same dilemma, then funding the war in Ukraine will be reduced.

Thanks to the new secondary tariffs, Americans can buy their phones from India.

US company Apple is moving most of its iPhones Production in India – Especially for mobile phone manufacturing to be sold in the United States.

If these products are subject to new tariffs, our consumer prices may double. That’s because companies that import goods pay tariffs – these companies tend to increase their costs to their customers by most, if not all.

Imports from India to the U.S. have faced 25% tariffs as part of President Trump’s broader trade reshuffle, he told CNBC that the figures could be put forward “substantially”.

The Indian government accused the United States of having double standards, which demonstrated Washington’s own ongoing trade with Russia.

The vast majority of the deal is composed of U.S. imports from India, which last year was slightly above $3 billion (£2.2 billion), although that accounts for only 10% of the 2021 level.

The trade is mainly purchased by the United States for raw materials for nuclear energy and fertilizers. Russia is the main supplier of both.

China is buying the most Russian oil, and President Trump’s decision to impose secondary tariffs on Chinese goods will be more challenging.

This is because the United States imports from China five times the value of India, while more imports are consumer goods such as toys, clothing and electronics.

Secondary tariffs against Beijing may also undermine a lot Broader trade renegotiation Since Trump took office, he has been pursuing between the two largest economies in the world.

“This over-reduced attitude is unlikely to impress the Chinese,” said Simon Fistett, a trade expert at IMD’s School of Business.

He explained that given how close the president of XI and Putin are, Work together In recent years.

Most importantly, the last time Trump tried to use triple-digit tariffs on China, he found it didn’t work – because that cuts almost all trade between the two countries.

Another move like this could increase inflationary pressure in the United States, which Trump has long promised to resolve.

It can also cost a lot of manufacturing work when the economy is already struggling in multiple aspects.

Analysis from the Finnish-based Research and Clean Air Centre shows that the EU and Türkiye remain one of the largest buyers of Russian energy.

Until 2022, the EU is Russia’s first export destination, although this has been greatly reduced since the full invasion of Ukraine. Brussels recently agreed to buy a lot More energy from the United Statesbut there are still some imported from Russia.

In June, Ursula von der Leyen, President of the European Commission, Acknowledge this issue“Russia has repeatedly tried to blackmail us through weaponized energy supplies,” she said, and she has formulated plans to end imports by the end of 2027.

The U.S.-EU trade relationship is the largest in the world, and the two have just negotiated new trade terms This would impose a 15% tariff on most EU exports to the United States.

Many people in the EU Criticize the dealsaying tariffs would harm European exporters.

Now, they are also worried that secondary sanctions on the EU could cause greater harm. Increasing 100% tariffs on purchasing Russian energy could significantly reduce the amount of goods sold to the United States by the EU.

But the largest sellers include medicines and machinery, which may be difficult to source from elsewhere – meaning Americans have no choice but to pay more.

Russia’s own economy has proven to be very resilient since the start of the full-scale invasion of Ukraine, growing 4.3% last year.

But, Economy Minister Maxim Reshetnikov Recent warning After a period of “overheating”, the country is “in recession”. The International Monetary Fund (IMF) expects growth to be only 0.9% this year.

If secondary sanctions succeed in reducing demand for exports, they will bring Russia closer to recession.

The exact impact of the war on the Russian economy is hard to know, as Moscow has blocked a large amount of economic data since the full invasion, including oil and gas production.

About one-third of Russian government spending is funded by oil and gas funds, but exports have fallen.

Meanwhile, Putin is going to guide spending more than any time since the Cold War. Defense spending is believed to have reached 6.3% of GDP.

By comparison, Ukraine spent far 26% of the economic value of the pony in the war. The difference explains why its president, Volodymyr Zelensky, repeatedly seeks external help from his allies.

Trump’s tariffs aim to help Zelensky by cutting funds into Russia, who hopes to end Ukraine’s death, suffering and destruction.