U.S. President Donald Trump is doubling down. He proposed as much as 100% tariffs on India and China due to their purchases of Russian oil. Senior officials from the United States and European Union countries met in Washington on Tuesday. At this meeting, they released the new proposal. Our hope is that this effort will help to push both countries to re-evaluate their trade relationship with Russia during these continued and rising geopolitical tensions.
The Financial Times was the first to report on the ambitious proposal. Twitter abuse Two people with knowledge of the negotiations confirmed it to CNBC soon after. To retaliate the U.S. has slapped India with a 50% tariff. This includes a sizable 25% duty targeted specifically at India’s trade in Russian oil. Trump’s even more absurd tariff proposal comes as a surprise to no one. This is particularly remarkable, given that Europe has long been tentative to introduce tariffs in their trade policy toolbox.
As if that weren’t bad enough, the U.S. is preparing to raise the stakes on the tariff front. The European Union won’t be able to meet the White House’s arbitrary request. Europe continues to have a difficult and highly political trading relationship with Russia, particularly in light of the recent changes in energy imports. Russia’s share of EU pipeline gas imports dropped from 40% to 10%. That share tanked from more than 40% in 2021 to an expected 11.6% by 2024. As of this year, Moscow accounts for under 19% of the EU’s pipeline gas altogether. It is the source of almost half of our LNG imports too!
U.S. Secretary of Interior Doug Burgum stated that the Trump administration is focused on increasing U.S. market share in Europe’s energy sector. He pitched the idea of exporting LNG to Europe as a realistic solution, raising the prospect that LNG could help make Europe less dependent on Russian gas supplies.
“[Exporting] LNG would be one of the easiest things, [you can] put it on a ship, send it over here. Displace Russian gas, drive their market share to zero in Europe and drive U.S. market share up. That’s great for America, great for our allies, and we stop funding Russia’s side of the war.” – Doug Burgum
In fact, Trump not only pushed the EU to purchase U.S. LNG, he raised commitments to buy American coal and nuclear energy products as well. This commitment will amount to $750 billion over the next three years. The U.S. has pressured its European allies to pull their energy dependence away from Russia, and instead, toward U.S. sources.
Yet, as can be seen in reactions from impacted countries, there exists a cynical understanding that these tariffs would in fact work. India has reacted strenuously to the envisaged measures. They condemned them as “unfair, unjustified and unreasonable.” They noted the hypocrisy of U.S. and EU trade practices regarding Russia.
Ian Bremmer from Eurasia Group expressed that Europe’s response should be a firm refusal, as he believes Trump is attempting to shift responsibility for addressing Russia’s aggression onto Europe while avoiding direct conflict with China.
“Europe’s response should be ‘no.’ Trump kicked the hornets nest – let him deal with the consequences. But let’s see what happens.” – Bill Blain
Bremmer expanded on the implications. …” He pointed out that if Europe hasn’t drastically reduced its reliance on Russian energy after over three years of war, it’s doubtful they will cut off trade with their largest provider of commodities.
“Everyone knows if the Europeans haven’t been able to wean themselves off Russian energy themselves more than 3.5 years into the war, they sure as hell aren’t going to cut themselves off from their top goods import supplier.” – Ian Bremmer
The European Commission has underscored its commitment to working with international partners like the U.S. This means proactively coordinating with India and China to maintain sanctions in a new geopolitical landscape.
“The EU has engaged with all relevant global partners, including India and China, in the context of its sanctions enforcement efforts. This engagement will continue.” – European Commission spokesperson